Usa, Yellen: “Now it’s up to the Fed to tackle the imbalances between supply and demand”
No fear for recession, rise in prices and alarm unemployment. In the United States, the Secretary of the Treasury, Janet Yellen, is convinced that it is possible to reduce runaway US inflation while maintaining a solid labor market. And he says he hopes the Fed will come to do so. Speaking at an event organized by The Atlantic magazine, Yellen stressed: “I think there is a path to succeed in reduce inflation by maintaining a solid labor market and I sincerely hope that the Fed achieve this goal “.
Yesterday the Fed raised interest rates again by 75 points base and President Jerome Powell reiterated that fighting inflation could be painful for the economy. But the shortage of workers in the American labor market, which leads to higher wages, is one of the sources of inflation, Yellen explained, speaking of “probable inflationary pressures coming from the labor market “and underlining that” it is the Fed’s job to address the imbalances between supply and demand “.
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The US central bank after the monetary policy meeting it updated its economic forecasts. And he expects that the slowdown in activity caused by rate hikes will lead to a slightly stronger rise in unemployment than previously expected.
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The unemployment rate in the States is expected to reach an average of 3.8% in 2022 (3.7% previously forecast), and then rise to 4.4% in 2023 (from 3.9%). It was 3.7% in August, one of the lowest in the last 50 years. But some economists believe these forecasts are too low.
Therefore, yesterday the former US Treasury Secretary, Larry Summers, warned in a tweet that the unemployment rate would likely have to rise above 5% to see a strong and lasting slowdown in inflation. Yellen acknowledged that there is “a need for.” ease the pressure on the labor market“, without however” that the unemployment rate should increase as much “, he added.
“We can still have a good and solid job market. Without so much pressure on wages,” he said. Inflation in the United States stood at 6.3% on an annual basis in July, according to the latest available data from the PCE index, used by Fed, which wants to bring inflation back to around 2%. There is another inflation index, the CPI, which is a particular reference for indexation of pensionswhich in August reached 8.3% in one year.
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