Her message of continuity at the Fed was a reassuring one for investors, and it contributed to a major rally on Wall Street. The Dow Jones industrial average closed up 193 points.
Yellen's remarks to a House committee suggested that the Fed will keep its key short-term rate near zero for a prolonged period.
"The recovery in the labor market is far from complete," Yellen said, an indication that the Fed is in no hurry to boost short-term rates.
She said the Fed is monitoring volatility in global markets but doesn't think it poses a serious risk to the United States at the current time.
"Since the financial crisis and the depths of the recession, substantial progress has been made in restoring the economy to health and strengthening the financial system," Yellen said in her testimony for the House Financial Services Committee. "Still, there is more to do."
Some Republicans expressed concern that the Fed's extraordinary support could ignite high inflation or destabilize financial markets. The committee chairman, Jeb Hensarling, R-Texas, a critic of the Fed, said there were "clearly limits to what monetary policy can achieve."
Hensarling questioned whether the Fed had sent confusing signals to investors by changing its possible timetable for future actions on interest rates.
Yellen, the first woman to lead the Fed in its 100 years, was delivering the Fed's twice-a-year report to Congress a week after being sworn in to succeed Bernanke. He stepped down Jan. 31 after eight years as chairman.
Several committee members praised Yellen for breaking down a gender barrier at the Fed. Rep. Gregory Meeks, D-N.Y., told Yellen she would serve as an inspiration for his three daughters and said: "You have done it the old-fashioned way. You have earned it."
At the start of the hearing, Hensarling mentioned that Yellen had agreed to stay all day if necessary to allow all members of one of Congress' largest committees to question her. That was a break from recent practice, in which Bernanke and his predecessor, Alan Greenspan, tended to sit for questions for only two or three hours.
Yellen ended her testimony just short of six hours after the hearing began. The panel did take a 30-minute lunch break and two shorter breaks. At the end of the marathon session, Hensarling thanked Yellen for her "stamina."
The Fed chair drew praise for her direct responses. Rep. Shelley Moore Capito, R-W.Va., said she'd been able to understand more of Yellen's answers than she had the responses of Bernanke or Greenspan.
At times, Yellen was blunt. Asked what impact a failure to raise the federal debt limit would have, she said, "Frankly, it would be catastrophic to not raise the debt limit."
She was pressed by some Republicans to explain why she opposed legislation that would subject the Fed to audits by the Government Accountability Office on its rate decisions. Yellen noted that the Fed is already subject to GAO audits in some areas. But she said that allowing the GAO to second-guess interest-rate actions would subject the Fed to improper political influence.
Rep. Michele Bachmann, R-Minn., argued that the Fed was wrong to oppose the audit legislation. "The American people are feeling less and less empowered to hold the Fed responsible," Bachmann told Yellen.
At the other end of the political spectrum, Rep. David Scott, D-Ga., urged Yellen to be bolder in addressing long-term unemployment. He said many older workers who had been laid off and young people trying to enter the workforce were growing increasingly frustrated. He said Yellen should oppose Republican efforts to end the Fed's dual mandate to pursue maximum employment and price stability so it could focus solely on inflation.
Yellen said she felt the Fed's dual mandate "has served this country well."
Many economists think the Fed bond buying, which totaled $85 billion a month during 2013, will be reduced in $10 billion increments this year until the purchases are eliminated in December. The purchases of Treasury and mortgage bonds are aimed at stimulating the economy by keeping long-term loan rates low.
Rep. Carolyn Maloney, D-N.Y., asked Yellen to outline what developments might cause the Fed to slow or suspend its reductions in bond purchases. Maloney asked whether the weak job reports for December and January might prompt a pause.
Yellen acknowledged she was surprised by the sluggish job gains the past two months. But she suggested that job growth might have been held down by severe weather and was not necessarily a signal of a slowdown. She noted that when the Fed next meets March 18-19, it will have another jobs report to review.
Yellen said the Fed won't likely change its pace of bond reductions unless it sees a "notable change" in the economic outlook. The Fed's three rounds of bond purchases have driven its holdings above $4 trillion four times its level before the financial crisis struck with force in 2008. Eventually, it will need to sell those investments without sending interest rates soaring or otherwise destabilizing markets.
On bank regulation, Yellen said the Fed was committed to implementing the 2010 Dodd-Frank Act, which overhauls regulation to try to prevent a future financial crisis. But she agreed that oversight that's too aggressive can keep banks from making loans that small businesses need to operate.