U.S. Treasury Secretary Janet Yellen said on Thursday that she hoped the U.S. central bank (Fed) would “do the right thing,” U.S. Treasury Secretary Janet Yellen said on Thursday.

“I think there is a way to reduce inflation while keeping (…) a strong labor market. And I really hope the Fed succeeds,” said Treasury Secretary Joe Biden.

The Fed raised its key interest rate again on Wednesday to slow the economy and ultimately tackle inflation. Fed Chairman Jerome Powell warned that the fight against inflation will be painful for the economy.

But a shortage of workers in the U.S. labor market, which is pushing up wages, is one source of inflation, Yellen said, referring to “probable inflationary pressures in the labor market” and stressing that “it’s the Fed’s job (… ) to address the imbalance between demand and and offer”.

The US Federal Reserve also updated its economic forecasts at the end of its monetary policy meeting on Wednesday. He expects the slowdown in activity caused by the rate hike to lead to a slightly larger increase in unemployment than previously expected.

The unemployment rate is expected to rise to an average of 3.8% in 2022 (from 3.7%) and then to 4.4% in 2023 (from 3.9%). In August, it was 3.7%, one of the lowest rates in 50 years.

However, some economists consider these forecasts too small. Former US Treasury Secretary Larry Summers warned on Twitter on Wednesday that the unemployment rate would probably need to rise above 5% to see a strong and sustained slowdown in inflation.

Janet Yellen acknowledged that there is a “need to ease the pressure on the labor market,” but not that “the unemployment rate should rise this much,” she added.