Federal Reserve chair Janet Yellen is testifying on Capitol Hill Tuesday, delivering the Fed's semiannual monetary policy report. Yellen is expected to speak about the state of the economy as well as her role at the head of the central bank.

Analysts and investors will be looking for clues as to when the next interest rate hike will occur, some are betting on March. Yellen will likely address the issue of President Trump and the Republican Congresses desire to shake up the Fed.

During his campaign Trump was critical of Yellen, accusing her last year of keeping rates low for political reasons. Yellen will likely also address the ramifications of Trump's economic policies.

The Fed chair began by discussing improvements to the labor market. Her comments were aired on this morning's "Bloomberg Markets: Americas."

"The economy has continued to make progress toward our duel mandate objectives of maximum employment and price stability. In the labor market job gains have averaged 190,000 per month over the second half of 2016 and the number of jobs rose an additional 227,000 in January. Those gains bring the total increase in employment since...early 2010 to nearly 16 million," Yellen explained.

The unemployment rate was at 4.8% in January, more than five percentage points below where it was at its peak in 2010, Yellen continued. That figure is now in line with the median of the FOMC participants' estimates of the longer run normal level.

Over the past year there has been an improvement in the number of people working part time, but that would like full time employment. The pace of wage growth has also improved, relative it its pace a few years ago.

Yellen called this a "further indication that the job market is tightening." The Fed has also seen "large declines" in the unemployment rates for all major demographic groups.

With the "ongoing gains" in the labor market the Fed has also seen "moderate" expansion in economic activity. Steady gains in income is also helping consumer spending to rise at a "healthy pace," Yellen explained.

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