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Yellen: Fed will need to make more rate hikes

WASHINGTON - Despite low inflation and a lot of uncertainties in the economic outlook, Federal Reserve Chair Janet Yellen said Wednesday that she sees the need for the central bank to keep making gradual interest rate increases in the next few years.

Yellen, in prepared remarks for two days of semi-annual testimony before lawmakers, did not tip her hand on when the next rate hike would come. The Fed has raised its benchmark interest rate three times since December, to a range of 1 percent to 1.25 percent.

Inflation, however, has been running well below the Fed's 2 percent target in recent months, leading some analysts to argue that the policymakers should hold off on hiking rates. Yellen has attributed the lower-than-expected reading on inflation to price reductions in certain categories, such as wireless service plans and prescription drugs.

In her statement, Yellen also did not shed more light on the timing of the Fed's previously announced plans to shrink its $4.5 trillion holdings of U.S. Treasury and other securities that were bought in response to the 2008 financial crisis in an effort to drive down long-term interest rates and stimulate the economy.

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