In her testimony, Yellen also said that the U.S. central bank would decide at its upcoming monetary policy meetings - due to be held on March 14 and 15 - whether to raise the key interest rate once inflation rises closer to the Fed's two percent target and as employment continues to strengthen.
In December, the Fed modestly raised its benchmark short-term rate to a range of 0.5 percent to 0.75 percent, its first increase since December 2015.
Until then, the Fed had left its key rate unchanged at a record low - near zero -for seven years to energise an economy pummelled by the most severe recession in decades. That is a revival so-called animal spirits inspired by expectations that President Donald Trump will unfurl a host of pro-business policies, including a loosening of bank regulations, an increase in fiscal spending, and promises of cuts to individual and corporate taxes.
Yellen's prepared remarks came at the start of her two-day testimony, known as "Humphrey-Hawkins" for the 1978 law that first required it. Utilities and real estate, which tend to weaken in a rising rate environment, ended down 0.7 per cent and 0.5 per cent, respectively. Traders and investors will glean her remarks for clues on the timing of the next US interest rate increase, which could come as early as March.
It was increasingly clear that March is firmly on the table in terms of a possible rate hike, and the base case for the year is still three hikes overall.
"There's a risk that she would sound like she was somehow being obstructionist, that the FOMC was standing in the way of economic growth that could be achieved through fiscal expansion", said William Nelson, a former senior Fed staffer and now chief economist at The Clearing House, a banking trade group in NY and Washington.
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Chicago has seen a spike in gang-related violence that has garnered national attention from both media and President Donald Trump. The 11-year-old, Takiya Holmes, who was shot while sitting in her mother's auto , succumbed to her injuries earlier on Tuesday.
"The dollar could top ¥115 if hopes for a March rate hike further strengthen" due to strong data readings, said an official at another currency margin trading service company. Comments he made late last week reiterating his commitment to major tax relief helped drive up stock indexes to fresh record highs.
Adding to the upward pressure on interest rates was data showing producer price inflation is heating up.
Not surprisingly, investors cheered this signal that the Fed meant to keep a respectful distance behind the market, and that in deciding its interest rate policy, it would follow investor expectations, rather than taking the lead.
Yellen was appearing in Congress for the first time since Republicans took control of the White House and both houses of the legislature and she nodded to the uncertainties over the direction of USA economic policy.
Yellen agreed that the banks were profitable and in a better financial position than many of their foreign competitors.
"It's 22,000 pages long", pointed out Chairman Jeb Hensarling, the Texas Republican who floated a bill earlier this week that would strip more power from the Consumer Financial Protection Bureau and make it easier for banks to opt out of the Fed's compliance rules. In November, an independent review agreed in part and suggested ways that the Fed could be more transparent. With Tarullo's exit and the selection of a successor, Trump and likeminded Republicans in Congress could be able to soften the Fed's approach to regulation.