Yellen Sounds Dovish Notes

Updated from 12:58 p.m. EDT

The economy is likely to moderate after a big first quarter, with a cooling real estate market and less-frenetic consumer spending holding growth to a "more sustainable and trendlike pace," San Francisco Federal Reserve president Janet Yellen said in a speech Tuesday.

While inflation risks "are tilted slightly to the upside," Yellen argued, there is also reason to believe the Fed's campaign of 15 straight interest-rate hikes is having its desired effects. Among them are the refusal of higher energy prices to pass through to consumer products and the overall stability in core inflation.

"What I see is essentially pretty positive. The economy appears to be approaching a highly desirable trajectory," Yellen said. "Real GDP growth currently appears to be quite strong, but there is good reason to expect it to slow to around its potential rate as the year progresses. If it does, the degree of slack should remain within range of full employment and have little effect on inflation going forward. ...