Federal Reserve Chairwoman Janet Yellen said Friday that gradual rate hikes are likely this year but stressed that the central bank would move cautiously. In a speech to a conference in San Francisco, Yellen, for the first time, said that the Fed would stay on hold if there were further weakening in key inflation indicators. But she added that it would not take an increase in inflation or wages to prompt the Fed to raise interest rates. Yellen was relatively upbeat about the economy this year, predicting growth faster than a 2% annual rate, with further declines in the unemployment rate. Even with the stronger dollar, headwinds holding back the economy are diminishing, she said. As a result, "I expect that conditions may warrant an increase in the federal funds rate target sometime this year," Yellen said.
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