The Fed Chairwoman Janet Yellen said in a speech on Wednesday that the U.S. economy is ready for an interest rate hike.

"I currently judge that U.S. economic growth is likely to be sufficient over the next year or two to result in further improvement in the labour market. Ongoing gains in the labour market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2 percent as the disinflationary effects of declines in energy and import prices wane," she said.

Yellen noted that downside risks from abroad declined.

"Although developments in foreign economies still pose risks to U.S. economic growth that we are monitoring, these downside risks from abroad have lessened since late summer," the Fed chairwoman said.

She added that the Chinese economy will continue to expand moderately and gradually, and the government could add further stimulus measures if needed.