The Janet Yellen era officially began with the new Fed chair's swearing in at the central bank Monday morning. But Yellen's real challenges start next week, when she faces the House Financial Services Committee on Tuesday and the Senate Banking Committee on Thursday.
The House appearance will mark her first major public comments as the newly installed head of the world's most powerful financial institution. Yellen will certainly face pointed questions on monetary policy and the central bank's plans to continue drawing down stimulus, even in the face of the emerging markets selloff and mixed U.S. economic data.
The deeply experienced economist and central banker should have little trouble handling these policy questions. She's expected to stress that the Fed is following no preset course and could pause the tapering process at any time if conditions warrant.
But Yellen will also face mostly hostile Republicans, led by Financial Services Committee Chairman Jeb Hensarling, R-Texas, who wants to reduce the power of the Fed and open it up to further inspection by Congress.
Hensarling is expected to introduce legislation later this year that would make changes to the structure of the institution. Any such effort, should it clear the House, would face near certain failure in the Democratic Senate. But Yellen's performance before House Republicans will help determine how much momentum Fed bashers can generate. And there is no guarantee the Senate will remain in Democratic hands following the 2014 midterm elections.
The Senate Banking hearing next Thursday should be friendlier. But there are plenty of Republicans on the panel, including Mike Crapo (Idaho), Richard Shelby (Alabama) and Bob Corker (Tennessee). They'll will press Yellen on Fed transparency and the impact of the quantitative easing campaign on asset prices and possibly wealth disparity. Many Republicans view the Fed's policies as an opportunity to deflect charges that the GOP is mostly to blame for growing income inequality.
The next big test comes March 19 at the close of the central bank's policy meeting, when Yellen holds her first press conference. While the new Fed chair has done plenty of public speaking and handled question-and-answer sessions after events, those are quite different than full-dress press conferences with Wall Street and the rest of the world hanging on every word.
One senior Democrat recalled in a recent interview how many assumed that Tim Geithner, then the new Treasury secretary, was so smart and experienced at the New York Fed that his first press conference—during the height of the financial crisis—would be a breeze.
It was instead an abject disaster, with Geithner appearing to many like a deer in headlights.
"No matter how smart and talented and agile you are, it takes some time to get good at this kind of stuff," the senior Democrat said. "She will probably be fine, but it's never a guarantee."
(Read more: Don't call me 'chairwoman,' Yellen says)