Interest rates on the highway under the Federal Reserve plan

Despite persistently low inflation, Federal Reserve Chair Janet Yellen affirmed Wednesday that the central bank plans to raise interest rates gradually and begin shrinking its $4.5 trillion balance sheet this year.

The Fed’s policymaking committee “continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time to achieve and maintain maximum employment and stable prices,” Yellen said in written testimony she plans to deliver at 10 a.m. ET as part of her semiannual report to the House Financial Services Committee.

Her statement echoed her remarks at a news conference in June after the Fed raised its benchmark short-term interest rate for the second time this year. The Fed at that time reiterated its plans to hike its key rate a third and final time in 2017 and begin unwinding its asset portfolio, or balance sheet, a move that’s expected to push up long-term rates.