"I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy," Yellen, the Fed's vice chair, said in remarks prepared for delivery to the Senate Banking Committee on Thursday.
Her testimony appeared aimed in part at pre-empting Republicans on the panel who are critical of the Fed's unorthodox and aggressive monetary policy.
At the same time, her prepared remarks bolstered expectations in financial markets that the central bank would continue its easy money campaign to nurse the U.S. economy back to health.
If confirmed by the Senate, Yellen would be the first woman to lead the U.S. central bank. Although she can expect pointed questioning from Republicans when the hearing opens at 10 a.m. (1500 GMT), she is widely expected to win the Senate's backing.
Yellen said the economy and the labor market were performing "far short" of their potential, while price pressures remained muted.
"Inflation has been running below the Federal Reserve's goal of 2 percent and is expected to continue to do so for some time," she said, according to a copy of the testimony made available on Wednesday in advance of the hearing.
A voice for continuity
U.S. stock and bond futures both rose and the dollar slipped against the euro after news of the testimony hit traders' screens, continuing a trend that began earlier on Wednesday on speculation that her remarks would emphasize a need to support the economy.
Financial markets have long viewed Yellen as a policy dove more concerned about the high level of unemployment than about the risk that the Fed's efforts to spur stronger growth might lead to an unwanted rise in inflation.
She is widely expected to provide continuity with the ultra-easy monetary policies of Fed Chairman Ben Bernanke, whose term expires on Jan. 31.
"Given the perception of Yellen as a dove, there were some expectations that she would need to take pains to ensure that she will be tough on inflation," JPMorgan economist Michael Feroli wrote in a note to clients.
"That is not particularly evident in the prepared remarks, nor do we think she will get baited into talking more hawkishly tomorrow morning," he said.
The committee needs to vet Yellen's nomination before sending it to the full Senate for final consideration; the timing for action is uncertain, but the outcome appears assured.
Obama's Democrats control 55 of the Senate's 100 seats, which means the 67-year-old former economics professor need only win backing from five Republicans to reach the 60-vote threshold necessary to overcome Senate procedural hurdles.
The Fed has held interest rates near zero since late 2008 and has quadrupled its balance sheet to around $3.8 trillion through three massive bond-buying campaigns aimed at holding down long-term borrowing costs to boost growth and jobs.
It is buying $85 billion in bonds per month.
Critics worry that this monetary largesse could stoke future inflation and fuel asset bubbles as investors are driven into riskier assets in the hunt for higher returns.
Yellen's testimony, which represents her first public remarks on Fed policy since June 2, will be scrutinized for signs of how she feels about the costs and benefits of continued bond buying.
But analysts expect her to be very careful not to give any clues away ahead of the Fed's Dec. 17-18 meeting, although her stress on the need for stimulus reinforced expectations the central bank would not scale back its purchases until next year.
"This sentiment seems to reduce prospects for a December taper, but it doesn't necessarily rule out a small taper beginning as soon as January, if the data cooperate," wrote economist Dana Saporta at Credit Suisse in New York.