US growth rate needs to slow: Yellen

Treasury Secretary Janet Yellen said on Tuesday US growth needed to slow to a pace more in line with its potential rate to bring inflation back to target levels since the economy was operating at full employment.

But demand-supply imbalances in the labour market have abated, she said, which was a healthy sign for the economy.

"Growth has to slow. I mean, you want growth to slow, you want it to be in line with potential when you're operating at full employment," Yellen told reporters on Tuesday after a climate finance event in New York during the UN General Assembly week.

"It's completely natural and desirable, that growth -- the pace of growth -- is slowing."

US gross domestic product is still expanding at a pace well above what Federal Reserve officials regard as the non-inflationary growth rate of around 1.8 percent, often referred to as the "potential" growth rate.

US GDP expanded at a 2.4 percent annualised rate in the second quarter, and some estimates put the current quarter's pace at more than twice that. The robust US economy has defied an aggressive campaign of Fed rate hikes over the past 18 months, creating a conundrum for policy makers.