Rate hike 'probable' in coming months: US Fed chief

There is a 'probable' chance that the Federal Reserve will increase interest rates in the next few months, the bank's chair said Friday.

"It's appropriate for the Fed to gradually and cautiously increase our overnight interest rate over time," she said.

"And, probably in the coming months such a move would be appropriate," she added, while speaking at Harvard University.

The last time the Fed increased its benchmark interest rate was December -- the first in almost a decade.

Although it signaled last year that it would make at least 4 rate hikes in 2016, that expectation was reduced to 2.

The Federal Open Market Committee's minutes from the group's April meeting revealed last week that a rate hike "likely would be appropriate" if macroeconomic data in the following weeks suggest economic growth picking up in the second quarter.

Stating that she expects inflation to move toward the Fed's objective of 2 percent, Yellen also addressed the shortcomings and strong points of the economy.

"Productivity growth is miserable. That's a serious and negative development,” she said, but highlighted that the unemployment rate is close to its goal.

The chairwoman was not impressed, however, with wage growth although figures remained high. In April, the average rise in wages was 3.4 percent, compared to a year ago. It was its highest level since the recession in 2009.