Many Republicans were less enthusiastic. Sen. Charles Grassley, R-Iowa, warned that a continuation of the Fed's easy money policies "risks fueling an economic bubble and even hyper-inflation," which he said could cause "real and lasting damage to our economy."
House Financial Services Committee Chairman Jeb Hensarling, R-Texas, announced that he will hold hearings on the Fed's bond buying program and on the "potential unintended consequences" of the Volcker rule. That rule, approved by the Fed and other agencies, is aimed at preventing many large banks from trading for their own profit in hopes of preventing practices that helped lead to the 2008 financial meltdown.
Lobbyists for the banking and financial services sectors issued statements pledging to work with Yellen. Both industries have led a fight to water down restrictions imposed by Obama's 2010 law overhauling how the nation's financial system is regulated.
The Fed announced in December that the labor market has improved enough that it will begin reducing its $85 billion in monthly bond purchases, starting with a $10 billion reduction this month. It has pushed that money into the economy to try keeping long-term interest rates low.
But Yellen will face questions about how to manage that process. Moving too fast could spook financial markets and shove interest rates higher, while withdrawing the bonds too slowly could risk creating bubbles — that might burst — in real estate, the stock market or other assets.
The bond purchases have ballooned the Fed's holdings over $4 trillion. That leaves Yellen with decisions about how to wind down the central bank's balance sheet to a smaller, more normal level without destabilizing financial markets used to the huge cash infusions.
Yellen also will have to decide when and how to ease off short-term interest rates, which the Fed has kept near zero since December 2008. To assure investors that those rates won't precipitously rise, the Fed has repeatedly issued statements saying that policy will continue.