Janet Yellen Puts Fed on Path to Lift Rates

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By JON HILSENRATH

Federal Reserve Chairwoman Janet Yellen , sounding upbeat about the economy, laid the groundwork for interest-rate increases later this year.

“The employment situation in the United States has been improving on many dimensions,” Ms. Yellen told the Senate Banking Committee on Tuesday, her first of two days of semiannual testimony before lawmakers. Spending and production had increased at a “solid rate,” she added, and should remain strong enough to keep bringing unemployment down.

If the economy continues to strengthen as the Fed anticipates and officials become more confident that low inflation will rise toward their 2% goal, she said, the central bank “will at some point begin considering an increase in the target range for the federal funds rate.”

With that assessment, Ms. Yellen took an incremental step, shifting the central bank away from promises that interest rates will stay low and toward a discussion of when and how fast they will move up.

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