Afternoon Must-Read: Janet Yellen: The Economic Outlook

Janet Yellen: Testimony: The Economic Outlook–May 7, 2014: “Valuations for the equity market as a whole…

…and other broad categories of assets, such as residential real estate, remain within historical norms…. Bank holding companies… have improved their liquidity positions and raised capital ratios to levels significantly higher than prior to the financial crisis… stress tests mandated by the Dodd-Frank Act have provided a level of confidence in our assessment of how financial institutions would fare…. For the financial sector… leverage remains subdued and measures of wholesale short-term funding continue to be far below levels seen before the financial crisis…. The Federal Reserve finalized a rule implementing section 165 of the Dodd-Frank Act to establish enhanced prudential standards for large banking firms in the form of risk-based and leverage capital, liquidity, and risk-management requirements…. The Federal Reserve is considering whether additional measures are needed to further reduce the risks associated with large, interconnected financial institutions. While we have seen substantial improvements in labor market conditions and the overall economy since the financial crisis and severe recession, we recognize that more must be accomplished. Man… are still unemployed, inflation continues to run below the FOMC’s longer-run objective, and work remains to further strengthen our financial system…