David Lawder and Kanishka Singh
Spring Hill, Tennessee/Washington (Reuters) – United States Treasury Secretary Janet Yellen said on Wednesday that while inflation remains elevated, there are encouraging signs that the supply-demand mismatch in many sectors of the economy is easing.
“Over the past two years, we have successfully relieved supply chain pressures, including funding pop-up container yards and moving multiple Ultium’s that Yellen is building near Nashville “Ports to 24/7 operations”” said Cells LLC’s electric vehicle battery plant in a speech.
A jobs report last week showed that U.S. 1 Monthly job growth accelerated sharply, while the unemployment rate hit a more than -1/2 year low of 3.4%, suggesting a tight labor market could be a headache for the Fed as it reserves to fight inflation.
Fed officials said on Wednesday that further rate hikes are likely as the U.S. central bank puts pressure on the Fed, which is trying to bring down inflation, although no one is willing to suggest that January’s hot jobs report may prompt them to return to a more aggressive monetary policy stance .
The Federal Reserve decided last Wednesday to slow the pace of monetary policy, a historically aggressive rate hike campaign to reduce high inflation.
“Rates are indeed slowing down rise, which increases the cost of state and federal budgets on debt. So in that sense, it’s a drag. Our future forecasts have long assumed that interest rates will return to more normal levels,” Yellen added on Wednesday.
The labor market reduces the chances of a recession and increases the likelihood of a soft landing, in which the Fed curbs inflation without pushing the economy into recession.
Inflation is running above double its target, according to the Fed’s preferred measure .