Yellen waits to speaks at the Federal Reserve System Community Development Research Conference in Washington on March 23.
While acknowledging that the pace of growth in the US economy was slower than expected during the first quarter, Fed officials remained bullish on the country's economic prospects. "But the focus is shifting to whether the (strength) of USA economic fundamentals is for real", he said.
According to Investing.com's Fed rate monitor tool, almost 70% of traders expect the Federal Reserve to hike interest rates in June, compared to about only 60% prior to the interest rate decision. In their post-meeting statement today, the central bank policymakers provided little guidance on when their next rate hike might come.
The Federal Reserve kept rates unchanged at its May meeting but signaled it remains on track for its second rate hike of the year in June.
Most analysts expected there to be no action on rates this month.
Asian stock markets slipped and the dollar held its ground today after the US Federal Reserve's latest assessment of the USA economy reinforced expectations for more interest rate increases later this year.
Investors were awaiting Friday's monthly US non-farm payrolls report for greater signs of the Fed's likely rate hike trajectory through the end of the year. Economists will be watching the data closely to see whether lackluster reports on the economy that have emerged in the last month are evidence of a sustained trend.
Consumer spending, which accounts for about 70 percent of the US economy, increased only 0.3 percent in the first quarter, the smallest increase since the fourth quarter of 2009, according to the department. Household spending rose only modestly, but the fundamentals underpinning the continued growth of consumption remained solid.
Overall economic growth is expected to pick up this spring. "To me if there was any concern about the two rate hikes it's not merited by virtue of the statement here".
The central bank continued to describe the risks to its outlook as "roughly balanced", meaning officials consider it equally likely the economy will perform better or worse than projected. "A weak employment report would lead them to revise their outlook". Slower central bank demand also contributed to the weakness. The Fed is communicating its mantra of gradual rate hikes.
The Fed's belief is that the U.S.is already close to full employment and that higher wage growth, when it comes, is likely to flow through to higher inflation.
Oil prices were little changed on Wednesday in a volatile session as the market mulled US government data showing that while there were signs a crude glut may be receding, crude inventories remain large with gasoline demand weak.
State Street Global Markets head of multi-asset strategy for North America Lee Ferridge said this decision was unsurprising.