By Daniel Hunter

The US is likely to begin raising interest rates later this year, head of the Federal Reserve Janet Yellen has said.

In a speech, she said the Fed would start "normalising" monetary policy this year, despite weak economic data prompting the International Monetary Fund (IMF) to warn the US to delay an increase.

But she said that the country's jobs market needed to improve before a rate rise took place.

Speaking in Cleveland, Ms Yellen said she expects the economy to grow steadily for the rest of the year, which should allow it to increase rates.

"I expect it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalising monetary policy," she said.

"But I want to emphasise that the course of the economy and inflation remains highly uncertain.

"We will be watching carefully to see if there is continued improvement in labour market conditions, and we will need to be reasonably confident that inflation will move back to 2% in the next few years."