Yellen says uncertainties justify cautious approach

[...] since December, financial market turbulence at the beginning of the year, a global economic slowdown and a sharp drop in oil prices have kept the Fed on the sidelines.

Subdued foreign growth and the appreciation of the dollar weighed on exports while the energy sector was hit hard by the steep drop in oil prices since mid-2014.

Senate Banking Committee Chairman Richard Shelby, R-Alabama, questioned whether keeping rates low could run the risk of dangerous asset bubbles and financial market instability at some time in the future.

While overall growth, as measured by the gross domestic product, slowed to a tepid rate of just 0.8 percent in the first quarter, Yellen in her testimony pointed to encouraging signs that growth was strengthening in the second quarter.

Yellen's recent comments and those of other Fed officials indicate that they are being forced to rethink the path for rate hikes in the face of persistently slow economic growth and inflation that has remained below the Fed's 2 percent target for the past four years.