BOSTON—Federal Reserve Chairwoman Janet Yellen said rising inequality of wealth and income in the U.S. was impeding the economic mobility at the heart of American values.

“The extent and continuing increase in inequality in the United States greatly concern me,” Ms. Yellen said to a conference on economic opportunity and inequality sponsored by the Federal Reserve Bank of Boston. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans...