US Federal Reserve Chair Janet Yellen said she anticipates a gradual pace of interest rate hikes ahead, and financial analysts interpreted it as a sign that the Fed may be considering a go-slow approach. 

Yellen sounded upbeat about the US economy, as she appeared before Congress, citing rising home prices which tend to spur consumer spending and jobs.

The US stocks market rallied upon Yellen’s semi-annual testimony, but the US dollar dipped against peers. China’s yuan closed up 115 basis points to 6.7868 against US dollar on Wednesday. 

"The labor market has continued to strengthen. Job gains have continued to average 180 thousand per month," said Yellen. "So far this year, down only slightly from the average in 2016 and still well above the pace we estimate would be sufficient on average to provide jobs for new entrants to the labor force." 

Strong jobs growth normally leads to higher wages and when combined with a boost in employment, it generally puts upward pressure on consumer prices. But inflation has been stubbornly subdued.

"The 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," said Yellen. "That expectation is based on our view that the federal funds rate remains somewhat below its neutral level, that is the level of the federal funds rate that is neither expansionary, nor contraction and keeps the economy on an even keel."

Many in the financial industry interpret this language as being a strong hint that the Fed is likely to slow down the pace of future rate hikes.

Though Yellen says there's some uncertainty, she's also sticking to her original thesis that if economic conditions continue, eventually the inflation pressure will bubble up and that higher interest rates will be needed to contain that rising trend.