Central bankers will consider a short-term rate hike at the Federal Reserve's next policy meeting, Fed Chair Janet Yellen signaled during her testimony to Congress this morning, with markets shrinking back from record highs in reaction to the news.

With continued tightening in the labor market and rising inflation, Yellen painted an optimistic picture of the economy, saying she and her colleagues “expect the economy to continue to expand at a moderate pace, with the job market strengthening somewhat further and inflation gradually rising to 2%,” the Wall Street Journal reports.

Markets bounced around during Yellen’s speech on Capitol Hill, MarketWatch reports, toggling between minute gains and big losses as the market inferred from Yellen's comments that the Fed could raise rates sooner rather than later. The S&P 500 index was down two points to 2,325 below the record level reached Monday, with the Dow Jones trading down 0.1%, or 10 points off, and the Nasdaq off by seven points.