Federal Reserve Chair Janet Yellen struck a generally positive tone on the US economy on Monday — despite last week's disappointing jobs report.

Speaking at an event in Philadelphia, Yellen continued to say the Fed needs to raise rates, but she stepped back from putting a time period on that plan.

The Fed funds rate probably needs to rise gradually over time, she said, and hikes should come before all of the central bank's economic goals have been fully reached.

Most expectations for the next Fed rate hike were knocked back after US nonfarm payroll data on Friday showed US employers added only 38,000 jobs in May, far below expectations of 164,000.

Ahead of Yellen's afternoon remarks, CME's FedWatch tool showed the market implied probability of a rate hike is about 6 percent in June and 37 percent in July.

For her part, Yellen warned against overreacting to one monthly report, saying the overall labor market is quite positive. Although the recent slowdown in jobs bears "close watching," she said, wage growth may "finally be picking up."

"Although this recent labor market report was, on balance, concerning, let me emphasize that one should never attach too much significance to any single monthly report," she said in prepared remarks.

Still, Yellen said that an important theme of her remarks is the "inevitable uncertainty surrounding the outlook for the economy."

"The uncertainties are sizable, and progress toward our goals and, by implication, the appropriate stance of monetary policy will depend on how these uncertainties evolve," she said.

On the international front, Yellen said she is optimistic that foreign headwinds are fading, but added that the chance of a so-called "Brexit" could have "significant economic repercussions." (Britain is holding a referendum on European Union membership later this month.)

Monday was the Fed chair's last chance to offer insight into Fed thinking before a media blackout takes effect ahead of the June 14-15 monetary policy meeting.

The Fed raised its key benchmark interest rate in December for the first time in nearly a decade, but has held off since then due to concerns earlier this year about a global economic slowdown and financial market volatility.

First Published:Jun 6, 2016 10:17 PM IST