Fed close to goals, sees dual risks as it hikes rates - Yellen

NEW YORK (Reuters) - The Federal Reserve is "reasonably close" to its goals and should keep gradually raising U.S. interest rates to avoid the dual pitfalls of letting inflation drift below target for too long, and of driving unemployment down too far, Fed Chair Janet Yellen said on Tuesday.

A day after announcing her retirement from the central bank, planned for early February, Yellen said the Fed aims to avoid the "boom and bust" economy of the past. She added she does not believe that expectations for inflation - which has remained below a 2-percent target for five years - have drifted down "too much."

(Reporting by Jonathan Spicer and Stephanie Kelly; Editing by Chris Reese)