Federal Reserve Chair Janet Yellen said she still expects to raise interest rates this year if the economy meets her forecasts, with a ****ual 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 ****ual, Yellen, 68, said.
Echoing the Feds 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 ****ually abate.

Its clearly going to be one of the most dovish tightenings youll ever see, when it comes, because the Fed wants to make clear theyll still be very accommodative, said Dana Saporta, U.S. economist at Credit Suisse Group AG in New York.

U.S. stocks erased losses following Yellens remarks, with the Standard & Poors 500 Index rising less than 0.1 percent to 2,131.22 as of 1:46 p.m. in New York. The yield on the benchmark 10-year Treasury note was up two basis points, or 0.20 percentage point, or 0.02 percentage point, to 2.21 percent.

Yellen repeated that policy isnt on a pre-set course and the Fed may tighten more quickly if the economy performs better than expected or raise rates at a slower pace if it disappoints. Delaying the first rate increase until employment and inflation return to the Feds objectives would risk overheating the economy, Yellen said.