With monetary policy still modestly accommodative, the U.S. central bank should continue to raise interest rates slowly to keep jobs plentiful and inflation low, Federal Reserve Chair Janet Yellen said on Thursday.
"I think that allowing the economy to run markedly and persistently "hot" would be risky and unwise," Yellen said in remarks prepared for delivery to the Stanford Institute for Economic Policy Research.
While there are no signs as yet that the Fed is behind the curve or the economy is in danger of a sudden surge in inflation, she said, "I consider it prudent to adjust the stance of monetary policy gradually over time."
The Fed last month raised its short-term interest-rate target for only the second time in a decade, but signaled it would likely speed up the pace of rate hikes this year. Rates are currently targeted at between 0.5 percent and 0.75 percent.
With unemployment, at 4.7 percent, near what many economists including Yellen see as its long-run sustainable level, and inflation closing in on the Fed's 2-percent goal, most Fed officials expect to lift rates three times over the course of the next 12 months.