There wasn't really anything earth-shattering in US Federal Reserve Chair Janet Yellen's testimony before the Joint Economic Committee of the US Congress overnight where she discussed 'The Current Economic Outlook and Monetary Policy'.
Growth is gaining momentum, inflation remains low and the Fed is carefully monitoring it to determine whether it's transitory or more persistent, providing justification for the Fed's baby steps towards normalisation.
Yes Virginia, we've heard and read all these before. But it could not be denied that Madam Yellen will be leaving the US economy in much better shape than it was when she assumed office on the 3rd of February 2014.
The US economy grew by 1.7% in the year to the March quarter of 2014. Sure there were bumps in the intervening years with year-on-year growth rising by as much as 3.8% (March quarter 2015) ans slowing by as much as 1.2% (June quarter 2016) but since then growth has sequentially accelerated to reach 2.3% in the year to the September 2017 quarter.
The unemployment rate is down to a 17-year low of 4.1% in September from 6.7% in February 2014 and the 26-year high of 9.9% recorded in October 2009.
But inflation, as she acknowledged, remains below the Fed's 2.0% target. The core PCE price deflator - the Fed's favoured measure of inflation - increased by 1.3% in the year to September 2017, down from 1.4% when Yellen assumed office and despite the sharp improvement in the unemployment rate.
As for monetary policy direction:
"We continue to expect that gradual increases in the federal funds rate will be appropriate to sustain a healthy labor market and stabilize inflation around the FOMC's 2 percent objective. That expectation is based on the view that the current level of the federal funds rate remains somewhat below its neutral level--that is, the rate that is neither expansionary nor contractionary and keeps the economy operating on an even keel. The neutral rate currently appears to be quite low by historical standards, implying that the federal funds rate would not have to rise much further to get to a neutral policy stance. If the neutral level rises somewhat over time, as most FOMC participants expect, additional gradual rate hikes would likely be appropriate over the next few years to sustain the economic expansion."
The question is will the new Fed head continue along this path come February next year when Yellen's stint end.
Here, there's good news. At his confirmation hearing, president Trump's nominee, Jerome Powell, basically indicated that he would continue policy along the lines of his predecessor if confirmed.
Given, Wall Street's reaction - stock indices rose to fresh highs -- to Powell's statements, he passed the test.