US Treasury Secretary Janet Yellen said on Thursday that she believes the US economy does not need to further tighten monetary policy significantly to eliminate inflation expectations, and that strong employment is expected to achieve; Quota; Soft landing; Quota;.
Yellen said in an interview that in the past, the Federal Reserve sometimes had to tighten monetary policy significantly to prevent inflation from taking root in the economy and leading to economic recession.
"We don't need these now," Yellen said. "I think the current signs are very good, we will achieve a soft landing, unemployment rates will stabilize to some extent, and economic growth will slow down to sustainable levels. I think this is the key point of the situation we are in."
As of October, the unemployment rate has risen from 3.4% in April to 3.9%. According to economic research analysis, since World War II, an increase of this magnitude in the United States typically indicates a more severe increase in unemployment rates. The newly released data on Thursday also showed that US consumer spending and inflation have cooled in recent weeks, providing the latest evidence of sustained weakness in the labor market.
The data shows that the year-on-year increase in PCE in the United States in October was 3% (expected to be 3%), continuing to be steadily declining. At the same time, the core PCE annual rate, excluding food and energy prices, also decreased to 3.5% after rounding (expected 3.5%). Both of these data are the lowest since April 2021.
Yellen said, "Inflation has now dropped significantly," and prices of some previously high commodities such as eggs have returned to pre pandemic levels.
"Nowadays, wage growth is really translating into more real income. So I think Americans will gradually see the situation improving," she said.
Yellen emphasized that she believes the Federal Reserve will not need to exert as much force as it did in the past when inflation was out of control to curb price increases.
"The economic recessions you mentioned were when the Federal Reserve, like the current situation, used tightening policies to lower inflation, but at that time the Federal Reserve believed it was necessary to tighten to the point where the economy fell into recession. In order to lower inflation and deep-rooted inflation expectations, it may be necessary to do so, but we don't need it now," she said.