Janet Yellen
Janet Yellen has given her first public address as head of the Federal Reserve and gave her outlook on the US economy.Reuters

The recovery in the US labour market is "far from complete", according to the recently appointed head of the Federal Reserve, Janet Yellen.

In a text released ahead of her testimony to the House Financial Services Committee, Yellen said that while the labour market had started to improve, there were still too many long-term unemployed people.

"Those out of a job for more than six months continue to make up an unusually large fraction of the unemployed, and the number of people who are working part time but would prefer a full-time job remains very high," she said.

Yellen's focus on the health of the labour market is significant because the Fed started to wind down its massive monthly stimulus programme based on data suggesting the US economy is improving.

The Bureau of Labor Statistics said the number of non-farm payroll jobs added to the US economy in January was 113,000, muchlower than the 180,000 analysts were expecting.

However, US unemployment dipped to a five-year-low of 6.6%, edging closer towards the Federal Reserves 6.5% forward guidance threshold at which policymakers will consider hiking interest rates.

In December, the Fed knocked its bond-buying $85bn (€62.1bn, £51.6bn) a month stimulus down by $10bn.

Yellen also gave her outlook on the state of the US economy and what the Fed's monetary policy would look like under her stewardship.

She expects a "great deal of continuity" in the Fed's approach to monetary policy that she helped organise under her ex-boss Ben Bernanke, which saw the introduction of forward guidance, low interest rates and quantitative easing on a massive scale.

The Federal Open Markets Committee (FOMC), which sets interest rates, anticipates that "economic activity and employment will expand at a moderate pace this year and next," in the US economy, according to Yellen.

Inflation would head back to 2% over the coming years and recent volatility in the global financial markets would not be a risk to the outlook of the US economy, she added.

Since the peak of the financial crisis in 2008, "substantial progress has been made in restoring the economy to health and in strengthening the financial system" with efforts to separate investment banks from retail banks under the Volcker Rule, Yellen continued.

However, she said she was ultimately unsatisfied with the state of the US economy and wanted to see a better performance.

"Too many Americans remain unemployed, inflation remains below our longer-run objective, and the work of making the financial system more robust has not yet been completed," she said.