Durable goods orders rose 1.7 percent in August.
"Sustained low inflation such as this is undesirable because, among other things, it generally leads to low settings of the federal funds rate in normal times, thereby providing less scope to ease monetary policy to fight recessions", Yellen said.
During her speech, Yellen focused on the uncertainty with inflation and monetary policy, stating that it would be, "imprudent to keep monetary policy on hold until inflation is back to 2 percent".
On the economic front, USA new orders for manufactured durable goods in August increased 3.9 billion us dollars, or 1.7 percent, to 232.8 billion dollars, beating market consensus, the Commerce Department announced Wednesday.
Investors were also optimistic about the USA tax reforms expected to be announced by Trump's administration and Republicans in Congress today at 1920GMT.
The rise in US yields was stoked further by remarks from US President Donald Trump who said and lawmakers were working to pass a big tax cut for the middle class. Traders had no details on the plan, but speculated it might raise the federal deficit and increase government borrowing.
The FTSE 100 was up 0.38% to 7,313.51, while the pound was down 0.36% against the greenback at 1.3410, off earlier lows but with the dollar still underpinned by hawkish comments from Federal Reserve Chair Janet Yellen.
On the Shanghai Futures Exchange, gold for December delivery was recently at 279.65 yuan ($42.18) per gram, and the December silver was at 3,885 yuan per kg. But she did make clear the Fed still feels a gradual pace of rate hikes remains the base case.
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Not only is there a "high probability" of a USA rate hike in December, but the so-called dot-plot - which charts expectations of individual Fed members - suggests policymakers still envision three rate hikes next year. The S&P 500 closed a fraction of a point higher at 2,496.84, with eight of the 11 main sectors ending lower.
Weekly data on USA petroleum supplies will be released by Energy Information Administration late Tuesday and arly Wednesday.
Dow e-minis were down 10 points, or 0.04 percent, with 22,892 contracts changing hands. The tech-heavy Nasdaq Composite advanced 9.57 points, or 0.1%, to 6,380.16, recouping a fraction of losses from the previous session.
India's Sensex was declining 0.9 percent and benchmark indexes in Indonesia and Malaysia were down around 0.1 percent, while Singapore's Straits Times index was rising 0.9 percent and the Taiwan Weighted rose 0.7 percent.
-The Japanese yen decreased 0.2 percent to 111.98 per dollar.
In other commodities, the Brent crude oil spot price gained 0.14% to $58.61 per barrel as of 04:35 BST.
-The euro sank 0.5 percent to $1.1792, the weakest in five weeks.