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WASHINGTON: The U.S. unemployment rate remains low despite rising interest rates and easing inflation, representing a “hopeful sign” that consumer prices may fall without a significant fall. , a Federal Reserve official said on Tuesday (Jan. 10).

Central banks have hiked interest rates multiple times last year to curb decades of high inflation, trying to cool the economy while keeping the world’s largest economy from slipping into recession.

A slowing economy usually means slower job creation as borrowing is more expensive.

But Federal Reserve Board member Michelle Bowman said Tuesday in a prepared speech at an event in Florida that “unemployment remains low as monetary policy tightens and progress has been made in lowering inflation.” Stated.

“We see this as a hopeful sign that we can succeed in lowering inflation without a significant deterioration in the economy,” she added.

Last week, Labor Department figures showed that while the unemployment rate had fallen to 3.5%, job growth remained strong in December.

This is despite an aggressive campaign by the Fed to rapidly raise interest rates from near zero to 4.25-4.50%.

Bowman said he was encouraged by the strength of the job market and low levels of household debt.

“Low debt, a strong balance sheet and a strong labor market mean consumers and businesses can keep spending even when economic growth slows,” she said.

But she warned that the Federal Open Market Committee, whose policy is set by the Federal Reserve, will continue to raise interest rates because much needs to be done to bring inflation down.

Benchmark lending rates will need to stay at “sufficiently restrictive” levels for some time to restore price stability, she said.

She also touched on cryptocurrency activity, adding that the Fed and banking authorities will continue to focus on this area “in light of the material risks” they may pose.

Without stifling innovation, “we are thinking about some of these issues and what the regulatory approach might be,” Bowman said. Fed Officials See An Opportunity To Cut Inflation Without A Deep Recession

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