Speaking on Monday before the Fed's key policy meeting next week, Federal Reserve Chair Janet Yellen says interest rate hikes are likely now that risks from earlier this year have diminished.

She said, "If incoming data are consistent with labor market conditions strengthening and inflation making progress toward our two percent objective, as I expect, further gradual increases in the federal funds rate are likely to be appropriate and most conducive to meeting and maintaining those objectives."

Prospects of another hike this month were all but killed by a report last week showing only 38-thousand jobs were created in May. This somewhat muted recent upbeat data on consumer spending, housing and overall US growth.

The Fed chief said the jobs report was disappointing and bears watching. She also claimed, quote, "positive economic forces have outweighed the negative". Yellen was careful not to give timelines on raising interest rates. But she said rate hikes would probably be appropriate in coming months.