Federal Reserve Chairwoman Janet Yellen confirms the Fed will continue easing. The unemployment rate has not reached the Fed target for a faster pace of tapering yet, currently at 6.6%. The Fed is also targeting an inflation rate of 2.0%

The Federal Reserve Chairwoman says she “anticipate(s) that economic activity and employment will expand at a moderate pace this year and next”. And Janet Yellen “expect(s) a great deal of continuity in the FOMC’s approach to monetary policy”.

The Federal Open Market Committee, “has emphasized that a highly accommodative policy will remain appropriate for a considerable time after asset purchases end.”

Continuity is the operative word used in this statement, the first from Janet Yellen. She will clearly be a Chair of the Fed, at least thus far, to not upset the achievements of former Chairman Ben Bernanke. The FOMC, said as much, “His leadership helped make our economy and financial system stronger and ensured that the Federal Reserve is transparent and accountable. I pledge to continue that work.”

The Opening statement also listed a few of the successes for the US economy during 2013. Firstly, “Among the major components of GDP, household and business spending growth stepped up during the second half of last year.” In its Current Outlook, it appears that the economic recovery is under way and holding for 2013 and that “Real gross domestic product (GDP) is currently estimated to have risen at an average annual rate of more than 3-1/2 percent in the third and fourth quarters, up from a 1-3/4 percent pace in the first half.”

Market reaction: The release of the opening statement provided a selling opportunity in 10 Year Treasuries, which have seen heavy buying due to the emerging market worries and currency rebalancing. Gold futures were higher coming into the statement and surged a bit higher, hitting $1288.

– By Julien David

The full Opening statement to be delivered to the US House of Representatives is here: http://www.federalreserve.gov/newsevents/testimony/yellen20140211a.htm

By United States Federal Reserve (Obtained via email from Federal Reserve OPA.) [Public domain], via Wikimedia Commons See Photos Disclaimer

Continuity, Federal Reserve, FOMC, GDP