Fed's Yellen testimony: Additional gradual rate hikes likely appropriate over next few years

Key highlights from the pre-released text of the speech by Fed Chairwoman Janet Yellen's first part of 2-day semi-annual testimony in Congress:

• Monetary policy not on pre-set course
• FOMC expects additional gradual rate hikes likely appropriate over next few years
• Inflation response to economy is key uncertainty
• Fed funds rate remains somewhat below neutral level
• On Fed balance sheet: FOMC anticipates reducing Fed balances but larger than pre-financial crisis
• On Fed balance sheet: Does not intend to use balance sheet as active tool for monetary policy in normal times