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Janet Yellen, the US Treasury Secretary, said that the inflation rate in the country could be reduced without the cost of weakening the historically strong employment market.
"I don't think there is any reason why the unemployment rate needs to rise to lower inflation," Yellen said in a Reuters live interview on Thursday. She said there was no evidence that the labor market was so hot that wage pressure was a source of inflation. She assessed that the employment data was "consistent" with the downward trend of inflation.
Thursday's data showed that the US economy slowed down. Yellen downplayed the report, saying that "abnormal" factors inhibited growth. She said that the economy continued to operate at full speed.
Yellen said that the biggest component of consumer price rise is housing costs, and "I have no doubt" that the contribution of this part will weaken in the next year.
Yellen said that rents have "stabilized and declined in some cases". Over time, this change will be reflected in the housing part of the consumer price index.
The former Federal Reserve chairman declined to comment on the prospect of interest rate reduction, and pointed out that her successor Jerome Powell had said that policy makers needed more evidence to be sure that inflation would fall back to the target level of 2% before easing policies.
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