Caution in raising interest rates is especially warranted, Fed´s Yellen says

Readings on the US economy had been somewhat mixed so far in 2016, Yellen added.

The US Federal Open Market Committee expected a path of gradual hikes to interest rates would be required over the coming years, she said.

"I consider it appropriate for the Committee to proceed cautiously in adjusting policy. This caution is especially warranted because, with the federal funds rate so low, the FOMC's ability to use conventional monetary policy to respond to economic disturbances is asymmetric.

"One must be careful, however, not to overstate the asymmetries affecting monetary policy at the moment. Even if the federal funds rate were to return to near zero, the FOMC would still have considerable scope to provide additional accommodation," Yellen told the Economic club of New York.

However, as in her press conference following the US central bank´s last rate-setting meeting on 15-16 March Yellen said her remarks should be taken as a forecast which would be conditional on the outlook, it was not a plan which would be carried out regardless of economic developments.

As regarded the outlook for inflation, Yellen said it was "too early to say" if the pick-up seen in 'core' inflation was sustainable.

Global developments posed risks to US economy and another oil price drop could hurt global growth, she also said.

As of 17:32BST the Dow Jones Industrials was up by 0.32% or 52.97 points to 17,586, the S&P 500 by another 7.26 points or 0.36% at 2,044.41 and the Nasdaq Composite by 38.85 points or 0.81% to 4,805.57.

In parallel, the yield on the benchmark 10-year US Treasury note was lower by five basis points to 1.84% and that on two-year US government debt off by five basis points at 0.81%.