(Bloomberg) -- US Treasury Secretary Janet Yellen continues to see a path to lower inflation without a significant increase in unemployment, even as the Federal Reserve maintains an aggressive rate-hike strategy that could trigger a growth slowdown or a recession.  

Fed officials probably “need to ease some labor-market pressure, but I certainly don’t want to say that the unemployment rate has to rise” as high as 5%, she said at an event hosted by The Atlantic magazine in Washington Thursday. 

Her comment came in response to a question about former Treasury Secretary Larry Summers’ prediction that unemployment would have to hit 5% for at least six months before the inflation rate eased below 2.5%.

“A full-scale recession is a period when there’s excessive unemployment,” she said. “We have one of the tightest labor markets right now we’ve had in American history. I believe we can continue to have what most Americans would regard as historically low unemployment rates and a strong labor market where people can find jobs.”  

Policy makers on Wednesday raised interest rates by 75 basis points for the third time in a row, taking the total increase since March to 300 basis points and forecasting a further 1.25 percentage points of tightening before year end. In addition, officials cut growth projections, raised their unemployment outlook and Chair Jerome Powell repeatedly spoke of the painful slowdown that’s needed to curb price pressures running at the highest levels since the 1980s.

Read more: Yellen Says US Economy Facing Needed Slowdown, Not Recession

Central bankers’ forecasts showed unemployment rising to 4.4% by the end of next year and the same at the end of 2024 -- up from 3.7% last month.

“We have two job openings for every unemployed worker, and I think that’s putting inflationary pressure into the system,” Yellen said. “But we can still have a good strong labor market without quite so much pressure on wages.”

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