•Press Release Economic Policy Inequality
Washington DC — In response to the release of major policy revisions announced today by the Board of Governors of the Federal Reserve System, CEPR senior economist Dean Baker issued the following statement:
“It is encouraging to see the statement from Federal Reserve Board Chairman Jerome Powell that the Fed will now place its focus on maintaining high levels of employment, with a recognition that many groups are disproportionately impacted by unemployment. This is a focus that many of us have been urging on the Fed for more than a quarter century.
“This is very far from the position held by the Fed in past decades, where inflation was clearly the dominant concern, if not the only concern, of the Fed chair and other officials determining Federal Reserve Board policy. This excessive focus on inflation led the Fed to needlessly raise interest rates at many points in the last four decades.
“Unnecessary rate hikes prevented millions of workers from getting jobs, while higher unemployment denied tens of millions of workers the bargaining power needed to secure wage increases. Fed policy has been a major factor in the growth of inequality over the last four decades. Blacks, Hispanics, and other disadvantaged groups have been the primary victims of this policy.
“While the Fed cannot bring about a recovery by itself — fiscal policy set by Congress has an essential role to play — Chair Powell has made clear his intention to do what he can to restore the economy and bring back jobs. This is a very positive development.”