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As Yellen Faces Senators, Here's What To Watch For

Here's what to listen for at Thursday's hearing:

a¿¿ TAPER TIMING

Investors will be alert for any hints of when a Yellen-led Fed might start reducing its $85 billion in monthly bond purchases a¿¿ a slowdown often called "tapering."

The Fed has been buying Treasury and mortgage bonds to try to keep long-term rates low to fuel spending and growth. In June, Bernanke suggested that the Fed could start tapering its purchases by year's end if the economy improved as expected.

Stocks plunged on the news. And rates on long-term bonds and mortgages soared on investors' fear that the Fed's support for the economy would slow sooner than expected.

Since then, the economy and the job market have failed to show consistent strength. At its meetings this fall, the Fed decided the economy wasn't healthy enough for it to ease its stimulus even slightly.

Economists differ on whether the Fed will slow its bond buying when it next meets Dec. 17-18. Some say that despite a solid October jobs report, the economy remains too fragile. They think the most likely time for a pullback is March. That would be the first Fed meeting led by Yellen.

a¿¿ FEWER SECRETS AT THE TEMPLE

Watch for any hints that Yellen might extend or expand the Fed's move toward more openness to the public.

A 1980s book on Paul Volcker's chairmanship, "Secrets of the Temple," described a secretive institution that revealed next to nothing. That began to change under Alan Greenspan, and the move toward transparency accelerated under Bernanke: The Fed included more details in its post-meeting statements, provided more frequent economic forecasts and scheduled regular news conferences by the chairman.

Yellen has been a leading proponent of openness. One area where she may impose her stamp: The guidance the Fed uses to assure investors that it plans to keep short-term rates low for the long term.

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