* Yellen comments leave rate expectations unchanged on Wall Street
* Core inflation highest since January 2013
* Boeing biggest drag on Dow after Bombardier jet report
* Microsoft down after report of Salesforce deal talk
* Indexes: Dow down 0.09 pct, S&P off 0.01 pct, Nasdaq up 0.16 pct (Updates to early afternoon)
By Noel Randewich
May 22 (Reuters) - U.S. stocks were flat on Friday after Federal Reserve Chair Janet Yellen said it would be appropriate to raise interest rates this year if the economy continues on its current path, in line with broad expectations on Wall Street.
In a speech, Yellen said the economy was well-positioned for growth and that it would take several years to return to normal interest rates.
While the Fed is broadly expected to raise interest rates this year for the first time since 2006, the timing of the hike has kept the market on tenterhooks.
"I think the hike will be further down the road, probably December. Yellen is a dove more than a hawk, and she's not in a real rush to raise rates. She wants to do it, but she wants people to be prepared," said Wayne Kaufman, Chief Market Analyst at Phoenix Financial Services in New York.
At 1:25 p.m., the Dow Jones industrial average fell 15.65 points, or 0.09 percent, to 18,270.09, the S&P 500 lost 0.24 points, or 0.01 percent, to 2,130.58 and the Nasdaq Composite added 8.34 points, or 0.16 percent, to 5,099.14.
Both the Dow and the S&P hit new records this week, although they have traded in a narrow range and volumes have been subdued.
Consumer prices moderated last month, data showed, but the so-called core consumer price index, which strips out food and energy costs, posted its largest gain since January 2013.
The dollar rose to a 3-1/2-week high against the euro and U.S. bond yields rose after the stronger-than-expected rise in core consumer prices.
Seven of the 10 major S&P 500 sectors were lower, led by a 0.76 percent drop in the telecommunication services index .
Shares of Microsoft were down 0.70 percent after CNBC reported the technology company held significant talks to buy cloud software heavyweight Salesforce.com. Salesforce was up 2.26 percent.
Boeing shares fell 1.4 percent to $145.28 after the Wall Street Journal reported that Bombardier was considering a third model of its CSeries jetliner.
Declining issues outnumbered advancing ones on the NYSE by 1,804 to 1,153, for a 1.56-to-1 ratio on the downside; on the Nasdaq, 1,546 issues fell and 1,135 advanced for a 1.36-to-1 ratio favoring decliners.
The S&P 500 was posting 26 new 52-week highs and 3 new lows; the Nasdaq Composite was recording 65 new highs and 27 new lows. (Additional reporting by Lucia Mutikani, Tanya Agrawal and Ryan Vlastelica; Editing by Savio D'Souza and Nick Zieminski)