Local Fed branch commits to addressing disparities
The Federal Reserve Bank sets national monetary policy, such as interest rates. Now it plans to study U.S. economic issues and policies, especially its impact on diverse communities.
The Minneapolis Fed, the Reserve’s local branch, last week launched the Opportunity and Inclusive Growth Institute. The Institute will do research and make recommendations; will include a Visiting Scholar residency program; will hold a conference series starting this May to “explore topics” related to the Federal Reserve and the Institute’s mission; and will publish “working papers” on economic opportunity and inclusive growth issues.
Minneapolis Fed President and CEO Neel Kashkari told the audience and media, including the MSR, during the January 18 announcement at the Minneapolis Urban League, that this is a long-term commitment. After assuming his duties over a year ago, Kashkari traveled around the Minneapolis Fed’s Ninth District, which includes Montana, North and South Dakota, northwestern Wisconsin, Michigan’s Upper Peninsula, and Minnesota.
“I was surprised to learn [that] Minnesota has some of the worst racial and economic disparities in the country,” he pointed out in his opening remarks at MUL headquarters. He further stated that Congress gave the Federal Reserve “a duel mandate: stable prices and maximum employment. How do we have an economy that is growing at the highest sustainable level, such that as many Americans who want to work are able to work?”
Aware of the historical economic disparities among Blacks and other people of color around the country, especially Minneapolis’ North Side, Kashkari said, “This isn’t just about racial disparities. Instead of having this discussion at the Urban League in North Minneapolis, we could be having this conversation…in rural communities around the North District that are struggling. We could be having this conversation in almost any state in our nation.
“I travel all around the Ninth District meeting with families, men and women and kids of all colors,” he continued. “My message to them is for every person in the Ninth District and in this country to have the opportunity, and that is what this Institute is focused on. How do we achieve that? We know it’s not easy, but we are going to do our part to make that happen.”
During a Q&A with MUL President Steven Belton, Kashkari was asked about the effectiveness of the Fed looking at income equality in light of a new administration and a Republican-controlled Congress in Washington. The Fed is “a non-political organization,” he responded, “[but] we’d be foolish to ignore the political landscape we are operating in.”
“If we can tackle this issue in a way that brings people together on both sides of the aisle, I think we will be more effective than if we potentially take one side over the other. There are a lot of people who need help. I want to make this as inclusive as possible.”
Asked what might be the Institute’s top priority items in getting started, Kashkari told the MSR, “If we could pick one thing that could be transformative for communities [it] is making sure that every kid gets a good education.” But he noted on the Institute’s mission, “We really want to let the research guide us in terms of [what has] the most benefit for our investment in terms of research time.”
Belton also told the MSR that he hopes the Fed’s new Opportunity and Inclusive Growth Institute will ask “deep questions” and “big picture questions” in its research focus on income inequality.
“The Fed absolutely has a role” in helping to improve life for all Americans, said Kashkari. But he admitted that issues of income inequality “are decades in the making” and won’t be simply solved. “This is going to be a long-term research institute,” he stressed.
Charles Hallman welcomes reader responses to firstname.lastname@example.org.