The US can fight inflation without flooding the labor market: Yellen

The US can fight inflation without flooding the labor market: Yellen

The US Treasury Secretary estimated on Thursday that it is possible to bring down record inflation in the US while maintaining a healthy labor market. Janet Yellen.

Yellen said a day after the announcement Federal Reserve The Federal Reserve and the Central Bank raised interest rates by 0.75% for the third time in a row.

I very much look forward to the success of the Fed.”

On Wednesday, the Federal Reserve decided another sharp increase in its key rate in order to slow the economy and fight inflation, a fight whose chief said, Jerome Powellwarned that it would be painful for the economy.

However, the labor shortage in the US labor market, which translates into higher wages, is one source of inflation that is “likely” to put pressure. “The Fed’s job (…) is to address imbalances in ‘supply and demand’,” Powell said.

The Fed also updated its economic outlook on Wednesday, in which it expects to raise rates further, and for a longer period than expected.

The unemployment level is expected to average 3.8% in 2022 (versus 3.7% previously projected), and rise to 4.4% in 2023 (from 3.9% previously). In August, the unemployment rate was 3.7%, one of the lowest levels in 50 years.

Yellen acknowledged that “labor market pressure needs to be eased,” without that “meaning that the unemployment rate (necessarily) is going up a lot.”

“We can still have a good and strong labor market. Without too much pressure on wages,” he said.

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