Wall Street Journal (05/22/15) Jon Hilsenrath; Jeffrey Sparshott

The U.S. Federal Reserve is on track to raise interest rates this year even though the job market hasn’t fully healed, inflation is low, and growth is disappointing, according to chairman Janet Yellen. The bank will remain cautious, she says. It may be several years before the benchmark short-term rate returns to a level considered normal over the long run. Though officials expect the rate to eventually reach 3.75%, it likely will be below that level at the end of 2017. The economy is expected to gain momentum in the coming months.

Even though the unemployment rate fell to the relatively low level of 5.4% in April, it “probably does not fully capture the extent of slack” in the economy, Yellen says. Numerous people have dropped out of the labor market, while others are working in part-time jobs when they prefer full-time jobs.