Yellen says to expect 'gradual' interest rate hikes this year

Federal Reserve chairwoman Janet Yellen said investors should expect a "gradual" hike in interest rates by the end of the year, but warned the central bank will move cautiously.

On Friday, speaking in San Francisco, Yellen admitted he Fed would remain on hold if key inflation indicators were to weaken even further.

However, she added that an increase in inflation or wages was not necessary for the Fed to raise interest rates.

The Fed chairwoman insisted she remained cautiously confident about the US economy in 2015, saying she expected further declines in the unemployment rate, while she estimated growth to rise at a faster pace than the expected 2%.

"I expect that conditions may warrant an increase in the federal funds rate target sometime this year," said Yellen, adding than despite a strong a dollar, headwinds weighing on the economy were slowly disappearing.