The dramatic collapse of Silicon Valley Bank and Signature Bank last month rattled the industry, prompting US authorities, including the Treasury Department and Federal Reserve, to step in to prevent contagion.
While the situation has calmed, analysts warn that fallout from the recent instability could continue — as banks tighten lending standards, reducing available credit to households and businesses.
"I continue to anticipate that the US economy will grow and the labour market will remain strong, and inflation will come down," Ms Yellen said.
Her comments came after JPMorgan Chase chief executive Jamie Dimon warned this week that the current crisis is not yet over and will be felt for years to come.
While he noted that today's conditions are nothing like during the 2008 financial crisis, he added that it was not clear when the problems would end.
Asked about the matter, Ms Yellen said she is committed to ensuring that all deposits are safe and monitoring banking system conditions.
Officials are also "prepared to use all of our tools as needed for any size of institutions to keep the system safe and sound", she said.
After SVB's collapse, US authorities set out plans to ensure its customers would be able to access their deposits. A similar exception was announced for Signature Bank.
The Fed and other major central banks later launched a co-ordinated effort to boost lenders' access to liquidity.
"Our banking system is sound and it's resilient," Ms Yellen said, adding that it has strong capital and liquidity as well.
"The actions that we have taken are intended to reinforce that and to ensure broad public confidence," she told AFP.