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Yellen took over from former Federal Reserve Chairman Ben Bernanke on Feb. 1. During her testimony on Tuesday, Yellen also said the FOMC was likely to continue curtailing the Federal Reserve's monthly bond purchases "in further measured steps" during subsequent policy meetings. The central bank is currently purchasing a net $65 billion in long-term U.S. Treasury bonds and agency mortgage-backed securities each month. The pace of "QE3" bond purchases was lowered to the current level late in January, after being lowered to $75 billion in December. Before the December FOMC meeting, the Fed had purchased a net $85 billion a month in long-term securities since September 2012.
The FOMC is looking to move past the "less-traditional tools" it has used to help prop-up the U.S. economy in the wake of the financial crisis that crested during 2008, and get back to relying on the federal funds rate as its main policy tool. The short-term federal funds rate has been locked in a target range of zero to 0.25% since late 2008. The FOMC has repeatedly said that this "highly accommodative" policy was likely to remain in effect until the U.S. unemployment rate fell below 6.5%. We're getting close to that target, since the unemployment rate improved to 6.6% in January from 6.7% in December.