Yellen gave no indication that she favored another cut to benchmark interest rates, noting that the real federal funds rate is "at an accommodative level of around zero," or equal to the rate of inflation.
"I consider the current level of monetary accommodation to be appropriate. That, together with the fiscal package, should be sufficient to promote a gradual step up to moderate economic growth later this year," she said.
Yellen said the economy is pinned down by the "grim trio" of the credit crunch, the ongoing housing downturn and high commodity prices. "Activity is weak across most sectors of the economy," she said, with risks to the growth outlook still unusually large.
Yellen is not a voting member of the Federal Open Market Committee in 2008.
The Fed's interest rate cuts and moves to pump liquidity into the financial system "have mitigated the worst effects of the credit crunch," she said.
A copy of Yellen's remarks was made available in advance.