Fed's Yellen: 'Prudent' to adjust stance of monetary policy gradually

Janet Yellen,  chair of the Board of Governors of the Federal Reserve, speaking at the Stanford Institute for Economic Policy Research, notes that it is 'prudent' to adjust the stance of monetary policy gradually

Key Quotes

Inflation increasing to 2% over the next 2 years 

Unwise to allow US economy to run persistently 'hot'

Determining how best to adjust rates to foster strong job growth, low inflation won't be easy

Labor utilization close to estimated long-run level

Inflation likely to reach fed's 2-pct goal over next couple of years

Expects further strengthening of labor market in coming months

Fed policy is not behind the curve

Simple monetary policy rules, like the Taylor rule, provide useful guidance, but can be problematic

Surge in inflation from suddenly overheating job market unlikely

Stance of monetary policy remains modestly accommodative

Downward pressure of fed's balance sheet on rates is expected to decline

Fiscal policy may affect outlook, rate path, but uncertainties remain