The Committee continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time to achieve and maintain maximum employment and stable prices. "Specifically, Yellen commented that based on current estimates, the federal funds rate:would not have to rise all that much further" to reach a neutral level and that at this point the Fed will continue to tighten policy gradually. Because the neutral rate is now quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance.
The dollar eased form highs against a basket of global currencies on Wednesday, as Janet Yellen's prepared remarks to congress pointed to a "gradual" tightening in interest rates, revealing that the Federal Reserve remained wary of continually raising rates amid a slowdown in inflation.
Investors and some Fed officials, concerned with the recent dip in inflation, have been wanting to see a surer progress toward the central bank's goal of 2 percent inflation.
It would be "quite challenging" for the United States to reach the 3% growth target set by President Donald Trump, Yellen told a Senate committee today.
The Fed still feels the economy needs loose - or accommodative - monetary policy, so a lower neutral rate may mean fewer rate hikes.
However, she listed inflation as one of the uncertainties the economy is facing.
Afghan forces recapture key district in southern Helmand province
US military officials said the soldiers had been conducting an operation with partnered Afghan security forces when they came under fire.
Japan's Nikkei 225 gained 0.19 percent. It had hit a record of 21580.79.
Also weighing on the greenback, was a rise in the Canadian dollar, after the Bank of Canada raised rates from 0.5% to 0.75% for first time in seven years.
The financial index, which is sensitive to rate hikes, pared early losses to trade little changed.
Investors will be keeping an eye on second-quarter earnings reports on Friday from big US banks including JPMorgan Chase, Wells Fargo and Citigroup.
Advancing issues outnumbered decliners on the NYSE by 2,416 to 376.