Yellen says that inflation has been below target since 2013 for a variety of factors.
"One of the macroeconomic consequences of Harvey that's still playing out is the cost to energy markets".
The rand perked up a little on Wednesday morning‚ after consumer inflation rose in line with market expectations.
If we are using a 10-year horizon, the economy may have had one or two more recessions over that time if economic history were to repeat itself. That's because it's too soon for Fed officials to abandon that framework for forecasting price pressures, said Josh Wright, chief economist at iCIMS Inc.in Matawan, New Jersey.
The Federal Reserve has said that it will start to run down some of the investments it made to boost the USA economy after the financial crisis. But it also has predicted a "modest" rebound in inflation. Kass said he expected interest rates to gradually rise to around 3 percent. That would mean inflation would fall short of the Fed's 2 percent target for the sixth straight year.
"Job gains have remained solid in recent months, and the unemployment rate has stayed low", the FOMC said in a statement. The median prediction is now that the benchmark rate will stabilise at 2.8 per cent, down from a median estimate of 3 per cent in June. Policy decisions have been made in conjunction with the Fed's dual mandate of 2% inflation and maximum sustained employment.
The same reasoning informed its decision to raise interest rates four times since late 2015, which made the US central bank something of a trail blazer for its worldwide peers that are still struggling to boost inflation and growth.
The Fed also said Wednesday that it will begin to gradually unwind its $4.5 trillion balance sheet next month. The portfolio primarily consists of government and mortgage-backed bonds. Income-seeking investors find those stocks less appealing when bond yields move higher. The U.S. central bank intends to spend $10 billion less on bonds beginning next month, a figure that will eventually reach $50 billion a month in October 2018. The rise in bond yields weighed on utilities, real estate companies and other bond proxies.
The Federal Reserve has four meetings left before Yellen's term ends in February, 2018, It has already put interest rates up twice in 2017 and the general mood is it will not happen again this year.
The first step will be to halt the reinvestment of the proceeds of its bond holdings into more securities, rather than outright sales.
EUR/USD fell to a fresh low for the day at 1.1862 as the Yellen press conference moved along.
The Standard & Poor's 500 index inched up 1.59 points, or 0.1 percent, to 2,508.24.
At 11:02 a.m. ET, the Dow Jones Industrial Average was down 1.88 points, or 0.01 percent, at 22,368.92, the S&P was down 1.73 points, or 0.07 percent, at 2,504.92 and the Nasdaq Composite was down 26.50 points, or 0.41 percent, at 6,434.82.
The US central bank is expected to keep interest rates steady and announce the end of a post-financial crisis economic stimulus program following a two-day policy meeting on Wednesday.
The Fed is widely expected to leave interest rates unchanged, although traders will pay close attention to the accompanying statement for clues about the outlook for policy.
With the Fed's shrinking balance sheet, a source of liquidity for markets will dry up, likely resulting in a small increase in interest rates. Tightening began in December of 2015 and the Fed funds rate remains in the 1% to 1.25% range. In the spot market, the yuan opened at 6.5755 per dollar and was changing hands at 6.5675 at midday, 185 pips firmer than the previous late session close but 0.01 percent weaker than the midpoint.
The greenback was steady at 111.57 yen, below its eight-week peak of 111.87 set earlier Tuesday.