In her semiannual monetary policy report to Congress, Federal Reserve Head Janet Yellen said since her last report in February, “The FOMC continues to anticipate that economic conditions will improve further and that the economy will evolve in a manner that will warrant only gradual increases in the federal funds rate.”

The following commentary was excerpted from Yellen’s speech:

“The committee expects that the federal funds rate is likely to remain, for some time, below the levels that are expected to prevail in the longer run because headwinds — which include restraint on U.S. economic activity from economic and financial developments abroad, subdued household formation and meager productivity growth – mean that the interest rate needed to keep the economy operating near its potential is low by historical standards. If these headwinds slowly fade over time, as the committee expects, then gradual increases in the federal funds rate are likely to be needed.

“In line with that view, most FOMC participants, based on their projections prepared for the June meeting, anticipate that values for the federal funds rate of less than 1% at the end of this year and less than 2% at the end of next year will be consistent with their assessment of appropriate monetary policy.

“Of course, the economic outlook is uncertain, so monetary policy is by no means on a preset course and FOMC participants’ projections for the federal funds rate are not a predetermined plan for future policy. The actual path of the federal funds rate will depend on economic and financial developments and their implications for the outlook and associated risks. Stronger growth or a more rapid increase in inflation than the Committee currently anticipates would likely make it appropriate to raise the federal funds rate more quickly. Conversely, if the economy were to disappoint, a lower path of the federal funds rate would be appropriate. We are committed to our dual objectives, and we will adjust policy as appropriate to foster financial conditions consistent with their attainment over time.”