Yellen sticks to script: rate hikes expected in 2015

Federal Reserve Chair Janet Yellen on Friday said she continues to expect the central bank will increase interest rates in 2015, but repeated the pace of the hikes would likely be gradual.

"I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy," Yellen told an audience in Cleveland, making her first public comments since the June gathering of the Federal Open Market Committee.

The direction of the economy and inflation are uncertain, and unexpected events could postpone the first Fed rate increase in nearly a decade, Yellen stressed. Greece's ongoing debt troubles are one unknown element, she said.

The Fed is considering the U.S. economy and headwinds from overseas as it looks to raise rates from record lows, with Yellen offering an overall upbeat view of the U.S. economy while acknowledging the labor market "has not fully recovered."

U.S. companies added 223,000 workers to their payrolls in June, while the unemployment rate stood at 5.3 percent.

Asked if she had any advice to offer Congress on crafting fiscal policy, Yellen said she was "pleased that fiscal policy is effectively neutral," given "there was a period when fiscal consolidation served as a significant drag on the recovery."

"Particularly if healthcare costs rise more rapidly than other prices we will again face mounting debts," Yellen added of the nation's debt-to-GDP ratio.

Yellen delivers her semiannual testimony to Congress next week.