(Bloomberg) -- Chairwoman Janet Yellen signaled the Federal Reserve is close to lifting interest rates as the U.S. economy continues to create jobs at a healthy clip and inflation inches up.

A rate hike "could well become appropriate relatively soon if incoming data provide some further evidence of continued progress toward the Committee's objectives," Yellen said in the text of testimony she is scheduled to deliver Thursday in Washington before Congress's Joint Economic Committee.

Yellen, who made no mention of the prospective policies of the incoming administration of President-elect Donald Trump, reiterated the expectation of Fed officials that future rate increases will be "gradual."

Yellen's remarks will serve to cement expectations, barring a significant negative surprise, for an increase in interest rates when the Federal Open Market Committee gathers in Washington Dec. 13-14. Pricing in federal funds futures contracts already imply a greater than 90% chance of a quarter-point hike.

(Bloomberg News)
Chairwoman Janet Yellen is scheduled to reiterate the expectation of Fed officials that future rate increases will be "gradual," according to prepared remarks she is scheduled to deliver before Congress's Joint Economic Committee. (Bloomberg News)

The Fed chair warned of the risks attached to waiting too long before raising rates.

"Were the FOMC to delay increases in the federal funds rate for too long, it could end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of the Committee's longer-run policy goals," she said. "Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and ultimately undermine financial stability."

She added because current policy is only "moderately accommodative" that mitigated the risk to the economy of the Fed "falling behind the curve in the near future."

At their most recent meeting, earlier this month, Fed officials said the case for raising rates had "continued to strengthen" and that risks to the U.S. economy appeared "roughly balanced."

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