Fed funds rate headed towards 3% over medium-term, Yellen says

Policy interest rates in the US might rise towards 3% by the end of 2019, the head of the US central bank told an audience.

In remarks prepared for a speech to the Commonwealth Club in San Francisco, Federal Reserve chief Janet Yellen said: "Now, many of you would love to know exactly when the next rate increase is coming and how high rates will rise. The simple truth is, I can't tell you because it will depend on how the economy actually evolves over coming months. The economy is vast and vastly complex, and its path can take surprising twists and turns.

"What I can tell you is what we expect--along with a very large caveat that our interest rate expectations will change as our outlook for the economy changes. That said, as of last month, I and most of my colleagues--the other members of the Fed Board in Washington and the presidents of the 12 regional Federal Reserve Banks--were expecting to increase our federal funds rate target a few times a year until, by the end of 2019, it is close to our estimate of its longer-run neutral rate of 3%.

"[...] Right now our foot is still pressing on the gas pedal, though, as I noted, we have eased back a bit."

As of 2015 GMT, the yield on the benchmark 10-year US Treasury note was eight basis points higher at 2.40%.