In a closely watched visit to Capitol Hill, Federal Reserve Chair Janet Yellen listed risk factors in the global economic scene, such as concerns over China's currency and market volatility. It's the first time Yellen has testified since the Fed nudged interest rates higher in December.

Yellen testified before the House Financial Services Committee on the central bank's semiannual Monetary Policy Report that was delivered to Congress on Wednesday. She'll testify in the Senate on Thursday.

In her prepared remarks, Yellen cited U.S. job and wage growth fostering gains in both incomes and consumer spending. She said the Federal Open Market Committee "expects that with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in coming years and that labor market indicators will continue to strengthen."

Yellen also said the committee "expects that inflation will rise to its 2 percent objective over the medium term."

Responding later to a question from Rep. Carolyn Maloney, D-N.Y., Yellen said she does not expect that the FOMC is going to be in a situation any time soon where it would need to look at cutting rates.

Several members of the House committee questioned Yellen about regulatory and policy decisions — including Rep. Brad Sherman, D-Calif., who said, "I feel like I'm at a ballroom dance on the deck of the Titanic."

Sherman went on to urge Yellen to use her agency's powers to break up large financial institutions, saying, " 'Too big to fail' should be 'too big to exist.' "

And Rep. Blaine Luetkemeyer, R-Mo., said that with interest rates still very low, it seems the Fed has few tools left with which to influence the U.S. economy.

"What happens if we have a downturn and you've already got $4 trillion on your balance sheet? What levers are still available to you to do something?"

Yellen responded that the Fed has "an array of tools," prompting Luetkemeyer to interject that short-term interest rates are already extremely low. Yellen replied that market expectations about Fed policy play an important role in the economy.

In her prepared remarks, the Federal Reserve chief's tone was more cautious when describing global economic and market conditions. Here's an excerpt:

"As is always the case, the economic outlook is uncertain. Foreign economic developments, in particular, pose risks to U.S. economic growth. Most notably, although recent economic indicators do not suggest a sharp slowdown in Chinese growth, declines in the foreign exchange value of the renminbi have intensified uncertainty about China's exchange rate policy and the prospects for its economy. This uncertainty led to increased volatility in global financial markets and, against the background of persistent weakness abroad, exacerbated concerns about the outlook for global growth. These growth concerns, along with strong supply conditions and high inventories, contributed to the recent fall in the prices of oil and other commodities. In turn, low commodity prices could trigger financial stresses in commodity-exporting economies, particularly in vulnerable emerging market economies, and for commodity-producing firms in many countries. Should any of these downside risks materialize, foreign activity and demand for U.S. exports could weaken and financial market conditions could tighten further."

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