During the conference, Yellen cautioned that the new forecasts shouldn't be viewed as estimates of the impact of the tax policy and stressed the uncertainty about the impact.

Fed officials, including herself, widely believed that the tax policy would tend to provide only "modest" lift to GDP growth in the coming years, said Yellen.

On this expectation, Fed officials largely kept their forecasts for inflation outlook and the pace of future rate hikes unchanged.

They expected the inflation would grow 1.7 percent in 2017 and further strengthen to 1.9 percent in 2018, and still envisioned three more rate hikes in 2018, unchanged from their forecast in September.

The forecasts indicated that Fed officials saw no reason to accelerate the pace of future rate hikes, although the proposed tax cuts would modestly boost the growth.

Yellen recognized that the soft inflation was one of the risks the policymakers were facing. However, she said that Fed officials continued to believe that the factors which were holding down inflation this year were likely to prove transitory.

They continued to expect the inflation will go up to the central bank's 2 percent target in the medium term, said Yellen.

In view of the rather low inflation reading, Yellen stressed that it's appropriate for the central bank to tighten monetary policy gradually.

At the press conference, Yellen noted that her nominated successor, Jerome Powell, has been part of the consensus shaping the Fed's gradual rate hike strategy.

Powell, now a Fed governor, was nominated by President Donald Trump in November to replace Yellen when her terms ends in February, 2018.

Investors and market watchers widely expected that Powell will maintain the continuity of the monetary policy at the central bank.