Fed chief Yellen's Q&A testimony before Senate committee

YELLEN ON TRANSITORY FACTORS AFFECTING PRICES

"Energy prices have continued to move down. I feel that eventually they will stop moving down and stabilize. Exactly when that will be, when that happens, when that eventually happens and the dollar stabilizes, inflation will begin to move up. It's hard to predict exactly when that will be and there can be and have been surprises.'

YELLEN ON FED STUDY OF NEGATIVE RATES

"We had previously considered them and decided that they would not work well to foster accommodation back in 2010. In light of the experience of European countries and others that have gone to negative rates, we are taking a look at them again, because we would want to be prepared in the event that we needed to add accommodation.

"We haven’t finished that evaluation. We need to consider the U.S. institutional context and whether they would work well here. It’s not automatic. There are a number of things to consider. So I wouldn’t take those off the table, but we would have work to do to judge whether they would be workable."

YELLEN ON NEGATIVE RATES IN EUROPE

"In the European countries that have taken rates to negative territory, I was surprised that it was possible to move rates as negative as some countries have done."

YELLEN ON CHANCES OF RECESSION

"We're watching developments very carefully. I would say there is always some chance of a recession in any year but the evidence suggests that expansions don't die of old age. We are…looking very carefully at global financial market and economic developments that create risks to the economy and we are evaluating them, recognizing they...may well influence the balance of risks. At this point I think it's premature to make a judgment."

YELLEN ON STRENGTH OF U.S. BANKING SYSTEM

"I think the steps that we have taken over the last seven years have had very substantial payoffs in the form of a much more resilient and stronger, better capitalized, more liquid banking system...

"I think we do have a strong banking system and we've seen marked improvement."

YELLEN ON 'TENTATIVE' SIGNS OF WAGE GROWTH

"At best I would say the evidence of a pickup is tentative. I do continue to envision that if the labor market continues to improve, as we certainly hope it will, that there is scope and we will likely see some further pickup in wage growth."