Yellen expects Fed to start rate hikes this year but stresses concerns about US economy.

Federal Reserve Chair Janet Yellen says she expects to start raising interest rates later this year but stresses that a number of headwinds are still holding back the U.S. economy.

She says the economic outlook remains murky, with lingering weakness in the labor market and new potential threats overseas.

Yellen, speaking on the economy for the first time since the Fed's June meeting, sees reasons for encouragement. But she also outlined a host of concerns, from low wage growth to a low labor participation rate. She says inflation is still well below the Fed's 2 percent target.

Yellen, whose comments came in a speech in Cleveland, says even when the Fed does start raising rates, the increases will be gradual.