U.S. stocks were higher in early afternoon trading on Wednesday, with the Dow at record levels, after Federal Reserve Chair Janet Yellen said interest rates hikes would be gradual and will not have to rise much further to reach a neutral level.
Yellen, in a prepared testimony delivered to Congress, said the Fed would wind down its massive massive bond portfolio while keeping a close watch on the low inflation.
The testimony depicted an economy that, while growing slowly, continued to add jobs, benefited from steady household consumption and a recent jump in business investment.
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.
Yellen said some temporary factors appear to be at work in holding down inflation but the Fed was focused on achieving the target.
"It was a little bit more dovish than most had thought," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
"She said rates won`t have to rise much further to get to neutral, I thought that was key. She said inflation response to economy is a key uncertainty, alluding to the inflation again, part of the dovishness."
The U.S. central bank will also issue its Beige Book at 2 p.m. ET, a compendium of anecdotes on the health of the economy. The Fed`s next policy meeting is on July 25-26.
At 12:47 p.m. ET (1647 GMT), the Dow Jones Industrial Average was up 111.34 points, or 0.52 percent, at 21,520.41, slightly easing from its record high of 2158.79.