Yellen: 1st rate hike likely by year end if economy improves

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Federal Reserve Chair Janet Yellen said she expects the Fed to begin raising interest rates later this year — if the job market improves and it is confident that inflation will rise closer toward its target rate.

But she cautions that the economy is still facing a number of headwinds that could stall growth.

In a speech in Rhode Island, Yellen highlighted problems such as disappointing wage growth and a significant number of people working part time who would like full time jobs. She also mentioned a weak housing recovery and global economic weakness.

But Yellen says because the Fed's interest rate moves take time to filter through the economy, she believes further improvements in the economy will likely make it prudent to start raising rates later this year.