The best way the Federal Reserve can help reduce racial inequality is to return the U.S. labor market to its pre-coronavirus strength, U.S. Fed Chair Jerome Powell said on Tuesday, as he sidestepped questions over whether the Fed itself contributes to the problem.
Anger over racism and inequality has swept the country since the police killing of George Floyd May 25 in Minneapolis, with people protesting en masse despite the ongoing threat of infection during the coronavirus pandemic.
The unrest has sharpened the public focus on economic plight of black and Latino families, who on average continue to earn less, have higher unemployment, and are harder hit when economic shocks like the coronavirus hit. In May, while white unemployment fell, black unemployment rose.
The “best single thing” that the Fed can do to address inequality, Powell told the Senate Banking Committee, is to “try to get the labor market back to where it was in February,” when unemployment was 3.5%.
But when Senator Sherrod Brown asked Powell for an open-ended study of how the Fed’s policies contribute to systemic racism, Powell said he would get back to him after conferring with his colleagues.
“We do consider racial disparities and things like that as a routine matter in our work now,” Powell added.
On Friday the Fed’s lone black policymaker, Atlanta Fed President Raphael Bostic, said here institutionalized racism constrains economic growth.
Powell, who had previously condemned racism in U.S. society, said he had sent Bostic an email thanking him for his comments.
Brown pressed further, asking if the Fed itself is responsible for unequal outcomes.
“There’s no doubt more that all of us can do to address these issues, and this feels like a time when people are going to be looking for ways to do more, and we certainly are going to be doing that,” Powell said.