Yellen maintains outlook for first Fed rate hike in 2015

Federal Reserve Board Chair Janet Yellen said she still expects to raise interest rates this year and repeated that the subsequent pace of increases will be gradual.

“I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen said in her first public remarks since the June meeting of the Federal Open Market Committee.

“But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step,” she said in the text of a speech Friday in Cleveland.

Yellen, 68, is moving the Fed cautiously toward its first interest-rate increase in almost a decade as she weighs conflicting pressures at home and from abroad. While improving economic data in the U.S. may push the Fed to consider tightening as soon as September, risks from Greece and China could prompt a delay.

In her only mention of Greece in her prepared remarks, Yellen said the situation in that country “remains unresolved.”

Fed policy makers in June forecast two quarter-point rate increases this year. The pace of tightening next year will be more gradual than they expected in March, the latest forecasts show. Since the June meeting, the labor market has shown further gains, along with housing and manufacturing, adding to evidence the economy is overcoming a first-quarter slump.

Fed Forecasts

Yellen said her outlook for the economy and inflation is “broadly consistent with the central tendency of the projections submitted by FOMC participants at the time of our June meeting.”