This article, originally published at 10:55 a.m. on Tuesday, Feb. 14, 2017, has been updated with testimony from a Senate committee hearing.

Why isn't the Federal Reserve as bullish on the U.S. economy's prospects as market indexes and investment analysts?

The answer, Chair Janet Yellen told members of the Senate Banking Committee during her semi-annual testimony on Tuesday, is simple: The central bank bases its assessments on current conditions rather than forecasts. 

Government stimulus programs such as investing in infrastructure and reducing taxes might well fuel further growth, driving inflation to the Fed's 2% target and bolstering employment, but they haven't been enacted yet, she said during the first of two Congressional hearings. The second, before the House Financial Services Committee, is slated for 10 a.m. Wednesday.

During Tuesday's event, senators peppered the Fed chair with questions on topics from the role of a key banking regulator who has yet to be named to plans to curb the central bank's balance sheet and the possible timing of future rate hikes. As usual, Yellen deflected queries about what specific measures the government should take to boost growth, including what tax changes would be appropriate. 

"It is important to remember that fiscal policy is only one of the many factors that can influence the economic outlook," the Fed chair said, reiterating that growth this year will likely lead to interest-rate increases.

The central bank's monetary policy committee projected as many as three, in fact, after a 25 basis-point hike at its December meeting. The current rate range of 0.5% to 0.75% has been increased only twice since it was cut to nearly zero during the 2008 financial crisis, and while Yellen reiterated that further moves are likely this year, she declined to elaborate on the timing.

"I would characterize her comments as less dovish, but I wouldn't say they were hawkish," Ryan Sweet, director of real time economics at Moody's, said afterward. "I think for the rest of the year she is going to sound a little bit more hawkish and that's consistent with the Fed's expectations that the economy is going to continue to strengthen."

Yellen projected the U.S. will continue to expand at a "moderate pace" as it moves toward maximum employment, with significant gains for minority groups. Inflation has increased over the past year, she said, mostly due to "the diminishing effects of the earlier declines in energy prices and import prices."

The timing and scope of a stimulus package from President Donald Trump's administration, meanwhile, remains a key variable. That may not happen until late this year or early next year, Goldman Sachs (GS - Get Report) economist Jan Hatzius said in a note to clients yesterday. 

"The hyper-polarized political climate has reduced whatever slim chance existed for bipartisan cooperation, e.g. with regard to infrastructure spending," under new Republican President Donald Trump, Hatzius noted. "Moreover, the more negative aspects of the Trump agenda -- trade and immigration -- are coming into clearer view."

Trump, who has no government experience, defeated Democratic rival Hillary Clinton in November on promises to revive economic growth while renegotiating trade deals that he described as "disasters" and tightening U.S. borders to immigrants.

Among his pro-growth proposals are curbing bank regulations that were strengthened in the wake of the 2008 financial crisis, a possibility that has alarmed Democrats.

Sen. Elizabeth Warren of Massachusetts, who campaigned for Clinton and has supported strong regulation, dismissed the Trump administration's claims that strict rules have hurt bank profitability and curbed lending as "alternative facts."

Financial institutions in the U.S. are stronger than their European counterparts, Yellen said in response to questions from Warren, and they typically command a higher stock price relative to their book values.

"I see well-capitalized banks that are regarded as safe, sound and strong as conferring a competitive advantage on those banks when competing for business," Yellen said. Her testimony comes as Federal Reserve Governor Daniel Tarullo, who led the central bank's enforcement of the Dodd-Frank finance reform law, prepares to step down in early April.

His departure, well before his term expires in 2022, would leave three of the seven governorships vacant, increasing Trump's opportunity to influence the central bank's direction. The governors oversee the Fed's day-to-day operations, including regulation, and all of them sit on the central bank's 12-member monetary policy committee. 

The New York Fed president holds the eighth seat, and the remaining four are rotated among the 11 other regional Fed presidents.

While Yellen's own tenure as a Fed governor extends through 2024, her term as chair expires in February 2018. She reiterated Tuesday that she intends to complete it.

The chair also pushed back on suggestions from some Fed presidents that the central bank might begin paring its $4.5 trillion balance sheet to curb inflation, should it begin accelerating too rapidly, Sweet noted.

That indicates it's not likely to happen soon, he said.