Will the Federal Reserve Support Inclusive Prosperity?
Lael Brainard, one of two female governors on the Fed board, has consistently argued that it is premature to raise interest rates until inflation accelerates and stays high. For groups that have traditionally not done well in downturns – particularly women and people of color – the stakes of the debate could not be higher.
WASHINGTON, DC – A major debate is in the making – or, more accurately, beginning to be reopened – in the United States about the appropriate objectives and triggers for monetary policy in the modern American economy. The stakes are enormous, including whether prosperity in the US can really become more inclusive – and who should lead the Federal Reserve in 2022 and beyond.
One vision comes from Lael Brainard, a member of the Federal Reserve Board of Governors since 2014, who on September 27 reiterated her compelling case for not prematurely raising interest rates in a pandemic-damaged economy. Jobs are coming back, but the recovery is slow and erratic. The Delta variant did real damage, on top of the deep disruption caused by previous COVID-19 waves. Among other problems, continuing or repeated school closures and major childcare shortages mean that many parents cannot yet return to work in person.
As Brainard emphasizes, “the pandemic has taken a significant toll on the labor market status of many mothers, particularly Black and Hispanic mothers, mothers with younger children, and mothers with lower incomes.” We are far from genuinely full or maximum employment.