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Thursday, December 08, 2022

US Treasury Secretary still sees prospects for low inflation without rising unemployment.

Janet Yellen’s remarks were in response to Larry Summers’ prediction that unemployment would have to reach 5% for at least six months before inflation could fall below 2.5%.

US Treasury Secretary Janet Yellen continues to see a possible way to reduce inflation without a significant increase in unemployment, even as the Federal Reserve maintains a Aggressive rate hike strategy that could trigger a growth slowdown or slowdown,

Fed officials probably “need to relieve some of the labor market pressure, but certainly” I don’t want to say raise the unemployment rate to 5%He said on Thursday at an event organized by The Atlantic magazine in Washington.

His comment came in response to a question about prophecy. Former Treasury Secretary Larry SummersUnemployment has to reach 5% for at least six months before the inflation rate can fall below 2.5%.

“A full-scale recession is a period when there is extreme unemployment,” he said. “We have one of the toughest job markets we have in the history of the United States right now., I think we can continue to have what most Americans consider to be a historically low unemployment rate and a strong labor market where people can find work.”

painful slump

The US central bank on Wednesday raised interest rates for the third time in a row by 75 basis points (bps), an overall increase of 300 bps since March, and predicted a 1.25 percentage point adjustment before the end of the year. In addition, officials lowered growth projections, raised their unemployment forecasts, and President Jerome Powell repeatedly spoke of a painful recession needed to contain price pressure, the highest since the 1980s. is on the level.

The Fed forecasts unemployment will rise to 4.4% by the end of next year and by the end of 2024, up from 3.7% last month.,

“We have two job opportunities for every unemployed worker, and I think that’s putting inflationary pressure on the system,” Yellen said. “But we can still have a nice strong labor market without so much pressure on wages.”

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