Yellen Says Fed Should Proceed 'Cautiously' Given Global Risks

Federal Reserve Chair Janet Yellen said on Tuesday that global risks were not expected to have a deep impact on the United States but that it was still appropriate for the Fed to proceed "cautiously" in hiking interest rates.

"Developments abroad imply that meeting our objectives for employment and inflation will likely require a somewhat lower path for the federal funds rate than was anticipated in December," when the Fed raised rates for the first time in a decade, Yellen said at the Economic Club of New York.

"Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy," Yellen said.

In her first remarks since a press conference after the Fed left rates steady at its most recent meeting earlier this month, Yellen said she still expected headwinds from weak growth abroad, low oil prices and uncertainty over China would abate and allow the recovery to continue.

"The overall fallout for the U.S. economy from global market developments since the start of the year will most likely be limited," Yellen said. "Developments have not materially altered the Committee's baseline - or most likely - outlook for economic activity and inflation."

(Reporting by Howard Schneider; Editing by Chizu Nomiyama)