* Yellen says Fed may not be able to raise rates "all that much"
* U.S. yields fall to multi-week lows. (Adds details, comment, byline, update prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 12 (Reuters) - U.S. Treasury yields tumbled across the board on Wednesday after prepared remarks from Federal Reserve Chair Janet Yellen dampened growing expectations of more than one interest rate hike for the rest of the year.
Yields, which move inversely to prices, dropped to three-week lows for the two-year note, while those on three-to-10-year maturities slid to two-week troughs.
In testimony to be delivered to Congress later on Wednesday morning, Yellen said the Fed would not need to raise rates "all that much further" to reach current low estimates of the neutral fed funds rate.
She did say, though, that the U.S. economy was healthy enough to absorb further gradual rate increases and the slow reduction of the Fed's massive bond portfolio.
In early trading, the benchmark 10-year Treasury yield fell to 2.302 percent, its lowest in two weeks, from 2.362 percent late on Tuesday. It was last at 2.319 percent.
At the front-end of the curve, the two-year yield dropped as low as 1.331 percent from 1.379 percent and last traded at 1.351 percent.
"The market was focused on the fact that the Fed may not be able to raise rates a lot more in this cycle because we're close to the neutral rate," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.
She added that the comments followed "two to three months of weak prints on inflation."
Rate futures indicated a 53 percent chance that the Fed would raise key overnight borrowing costs at its Dec. 12-13 policy meeting, down from 60 percent shortly before the release of Yellen's speech, according to CME Group's FedWatch program.
"A lot is going to depend on how the market reacts to the Fed's announcement of the change in its reinvestment policy," Rajappa said.
"If there is no sort of tantrum after the announcement, then it makes sense to hike rates in December." (Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama and Lisa Von Ahn)