The Federal Reserve is planning a series of gradual interest rate hikes in coming years to maintain economic expansion and achieve its inflation target, Chair Janet Yellen said Wednesday.
"The evolution of the economy will warrant gradual increases in the federal funds rate over time to achieve and maintain maximum employment and stable prices," Yellen said before the House of Representatives Committee on Financial Services. "That expectation is based on our view that the federal funds rate remains somewhat below its neutral level," she added.
The Fed has increased rates three times since December but weak growth remains an obstacle. The economy grew only 1.4 percent in the first quarter, while inflation remains below the 2 percent target.
Yellen said the central bank is aware of potential dangers of remaining below the inflation target but added she believes inflation will reach that level.
"Additional gradual rate hikes are likely to be appropriate over the next few years to sustain economic expansion and return inflation to our 2 percent goal," she said.
The Fed is expected to wait until more macroeconomic and inflation data is released in November or December before deciding on another rate hike, according to observers.
The next Fed meeting is scheduled for the end of the month.