U.S. Federal Reserve Chair Janet Yellen was clearer than ever Friday that the central bank was poised to raise interest rates this year, as the U.S. economy was set to bounce back from an early-year slump as headwinds at home and abroad waned.

    Yellen spoke amid growing concern at the Fed about volatility in financial markets once it begins to raise rates, and a desire to begin coaxing skeptical investors toward accepting the inevitable: that a 6-1/2-year stretch of near-zero interest rates would soon end.

    In a speech to a business group in Providence, Rhode Island, Yellen said she expected the world’s largest economy to strengthen after a slowdown due to “transitory factors” in recent months, and noted that some of the weakness might be due to “statistical noise.”

    The confident tone suggested the Fed wants to set the stage as early as possible for its first rate rise in nearly a decade, with Yellen stressing that monetary policy must get out ahead of an economy whose future looks bright.

    While cautioning that such forecasting is always highly uncertain, and citing room for improvement in the labor market, the Fed chief said delaying a policy tightening until employment and inflation hit the central bank’s targets risked overheating the economy.

    “For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target,” and begin normalizing monetary policy, Yellen told the Providence Chamber of Commerce.

    In a speech in March, Yellen said only that a rate hike “may well be warranted later this year,” though the Fed was at the time giving “serious consideration” to making the move.

    Investors globally are attempting to predict when the Fed will modestly tighten policy. Most economists point to September, while traders in futures markets held firm on December.

    “This is probably the most telegraphed Fed lift-off in some time,” said Bruce Zaro, chief technical strategist at Bolton Global Asset Management. “I think they’re concerned about the market’s reaction — they don’t want to have a period of volatility that causes the market to react in a crash-type form.”

    (SD-Agencies)