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Wednesday, October 5, 2022

US can fight inflation without sinking labor market, predicts Treasury secretary

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

Yellen said a day after the Federal Reserve (Fed, Central Bank) raised interest rates for the third quarter to 0.75%, “I think there’s a way in that that could be successful in reducing inflation … a strong one.” labour market.” continuous time.

“I have high hopes for the Fed to be successful,” he said.

On Wednesday, the Fed decided on another sharp hike in its key rate in an effort to slow the economy and fight inflation, a battle that its chairman Jerome Powell warned would be painful for the economy.

However, labor shortages in the US labor market, which translates into higher wages, are one of the sources of inflation that “potentially” exert pressure. “It is the job of the Fed (…) to counterbalance the supply and demand,” Powell said.

The Federal Reserve also updated economic forecasts on Wednesday, in which it considers more rate hikes, and longer than it had forecast.

The unemployment level is expected to average 3.8% in 2022 (versus 3.7% previously forecast), rising to 4.4% (3.9%) in 2023. The unemployment rate in August was 3.7%, the lowest in 50 years.

Yellen acknowledged that “the labor market pressure needs to be relieved”, not implying that “the unemployment rate (necessarily) rises that much”.

“We can still have a good, solid labor market. Without so much pressure on wages,” he said.

UL/ER/AG/DG

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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