New voices: Public shares its views on monetary policy at Boston Fed conference
‘Fed Listens’ event welcomes different crowd to offer perspective on central bank’s work
Federal Reserve banks regularly solicit input on aspects of the U.S. central bank from a variety of voices, including advisory boards, community councils, and a range of economists and other Fed experts.
At the Boston Fed, Monday was a day to hear from a different crowd altogether.
Panelists and audience members included representatives from community development organizations, nonprofits, small business owners, labor leadership, workforce development and housing advocacy agencies, among others. They gave a window into their own experience with interest rates, inflation, and labor markets, and they also underscored the need for financial education for more Americans.
Cedric Turner, of Empower Yourself, a Brockton, Mass.,-based financial literacy organization, recalled suggesting that one client in a financial jam use the equity in her home. Her response: “What’s equity?”
“Money is a language,” Turner said from the audience. “If you don’t understand the language, how can you know, ‘What is equity, what is anything?’”
The half-day conference was entitled, “New England Perspectives on Fed Policymaking: A Fed Listens Conference.” It was one of a series of public forums that Reserve Banks nationwide are holding this year as part of a broad review of U.S. monetary policy framework, which is the strategy, tools, and communication practices the Fed uses in pursuit of its “dual mandate” – the twin goals of maximum employment and price stability.
Boston Fed President Eric Rosengren said the Fed’s “listening tour” is about broadening an important and ongoing conversation.
“We’re hoping that as we hear these comments, we’ll have a much better idea how people are viewing the trade-off between inflation and unemployment, and how we should put that in the context of monetary policy,” Rosengren said.
Rosengren was joined on stage by Fed Vice Chairman Richard Clarida, who said the effort to get more public feedback is important as an evolving economy constantly presents new policy challenges.
“It makes sense for us to remain open-minded as we assess current practices and consider ideas that could potentially enhance our ability to deliver on the goals the Congress has assigned us,” Clarida said.
The first panel of the day featured people affiliated with organizations that work with underserved and low-income populations. Rachel Flum, executive director of the Economic Progress Institute, which advocates for lower-income Rhode Islanders, said she sees the tight labor market as a huge benefit.
She said even with the overall strength of the economy, different pockets and demographic groups – she noted black women in particular – aren’t enjoying the same prospects and wage growth as others.
“We would really push that the tighter the labor market can get over a sustained period of time, the better, in addressing these disparities,” she said.
A second panel, made up of business owners and entrepreneurs, generally agreed tight labor markets were a boon, but added the scarcity of labor and the resulting wage increases were something policymakers need to consider.
“I don’t know how much longer all of the small businesses, at least from a restaurant perspective, can continue at the price level they are at,” said Joanne Chang, owner of Flour Bakery and Myers + Chang restaurant.
The final panel of the day featured community leaders from different ethnic and age groups and included Glynn Lloyd, executive director of the Business Equity Initiative at Eastern Bank. He said general economic stability was critical because many small business can’t weather massive economic swings. He urged the Fed to keeping focusing on reducing the shocks of “the boom and bust economy.”
“From my perspective, it’s: 'How do you reduce those shocks, so the companies we’re working on currently can survive?'” he said.
The Fed’s effort was prompted in part by Boston Fed research suggesting the central bank should gather public input and periodically assess its policy framework, and it’s expected to wrap up this summer. The central bank’s policymaking body, the Federal Open Market Committee, will incorporate feedback from the events into a larger review of the best ways to pursue the dual mandate and will report their findings during the first half of 2020.