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“The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation,” she said.

Treasury notes were little changed after Yellen’s comments. The yield on the 10-year note was 1.95% at 3:57 p.m. in New York, down from 1.99% late Thursday.

Policy makers last week opened the door to an interest-rate increase as soon as June, while also signaling they’ll go slow once they get started. The benchmark federal funds rate has been kept near zero since December 2008.

Rates near zero helped cause a “sizable reduction” in labour market slack, and a modest rate increase is “highly unlikely” to halt that progress, Yellen said.

Rate Projections

She said the gradual path of tightening is reflected in a new set of projections by Fed officials released on March 18. Officials cut their median estimate for the main rate at the end of 2015 to 0.625%, down from 1.125% projected in December.

Officials have ruled out a move at the next meeting in April. The next scheduled session after that will be in June.

The labour market is “likely to improve further in coming months,” Yellen said. At the same time, progress on meeting the Fed’s inflation goal has been “notably absent.” Some of the weakness in inflation “likely reflects continuing slack” in labour markets.

Despite disappointing retail-sales data, she said consumer spending probably will “expand at a good clip this year given such robust fundamentals as strong employment gains, boosts to real incomes from lower energy prices, continued increases in household wealth, and a relatively high level of consumer confidence.”