Fed’s Yellen Still Sees Rate Rise in 2015

Federal Reserve Chair Janet Yellen said she still expects to raise interest rates this year if the economy meets her forecasts, with a gradual pace of tightening to follow.

While the labor market is nearing full strength, “we are not there yet,” she said Friday in a speech in Providence, Rhode Island.  “If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate,” she said.

Even after the first rate increase since 2006, “I anticipate that the pace of normalization is likely to be gradual,” Yellen, 68, said.  Echoing the Fed’s April statement, Yellen said she expects the economy to return to a “moderate” pace of growth after a disappointing first quarter as headwinds including a cooling global economy gradually abate.