Analysts at Nomura noted that the Federal Reserve Chair Janet Yellen appeared before the House Financial Services Committee overnight to deliver the Fed’s semiannual Monetary Policy Report to Congress. Key Quotes: "In her prepared remarks, she noted that the economy has made further progress toward the Fed’s objective of full employment since her last appearance before the Committee. But she also acknowledged that weaker growth abroad and the stronger dollar slowed growth in 2015 and that the economic data have been, on balance, on the soft side in recent months. She also highlighted that financial conditions in the US have recently become less supportive for growth. But overall, economic fundamentals remain positive for activity. On inflation, she stated that it continues to run below the Committee’s 2% objective, but in part this is due to low oil prices and the stronger dollar. Thus, she and the Committee expect inflation to rise gradually to the target over the medium term. With regards to monetary policy, she did not give much further guidance that we have not already heard previously from her or other FOMC members. She reiterated that monetary policy will depend on incoming data. In essence, she kept the possibility of a rate hike in March alive. During the Q&A session, she was careful to avoid saying that the Committee’s outlook had changed, but acknowledged that it will have to evaluate a range of issues such as the recent weak economic data, tightening of financial conditions and developments abroad. There were a number of questions on negative interest rates. Chair Yellen’s response suggested that this would not be the first tool used if the FOMC needed to loosen monetary policy. Overall, today’s Congressional testimony did not change our view on anything of substance. We continue to believe that a rate hike in March is unlikely and that if our outlook is realized, the FOMC will decide to raise interest rates at the June meeting. Chair Yellen will appear before the Senate Banking Committee tomorrow. Her prepared remarks will likely be unchanged from today’s testimony, but we may get more insights during the Q&A session." For more information, read our latest forex news.