Fed asset purchases have stimulated spending and "eased financial conditions" Federal Reserve Board Vice Chair Janet Yellen said Monday.

"Research suggests that our purchases of mortgage-backed securities pushed down MBS yields and that MBS yields pass through, with a lag, to mortgage rates," Yellen told a NABE Economic Policy Conference, according to prepared text of her remarks, released by the Fed. She added there is evidence that suggests "our asset purchases have been reasonably efficacious in stimulating spending. There is considerable evidence that these purchases have eased financial conditions, and so have presumably increased interest-sensitive spending."

Further, she said, the asset buys have not harmed "the functioning of financial markets," and as long as the Fed continues to monitor market function "I do not expect market functioning to become a problem in the future."

The Fed has the tools to withdraw accommodation, when needed, "even if the balance sheet at that time is large."

Unemployment "has imposed huge burdens on all too many American households and represents a substantial social cost," Yellen added. "Prolonged economic weakness could harm the economy's productive potential for years to come." Therefore, she advocates hinging monetary policy on labor market progress.

She touted forward guidance and the Fed's statement of "determination to keep monetary policy highly accommodative until well into the recovery" and the "thresholds for a possible change in the federal funds rate target."

"This improved guidance should help the public to accurately adjust their expectations for the federal funds rate in response to new financial and economic information, which should make policy more effective. In addition, I hope that improved guidance will help to boost confidence in the outlook and bolster households' unusually depressed expectations for income gains, which in turn will spur a faster recovery," Yellen said.

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