Economists play a vital role in the Federal Reserve System (Fed) by producing research and conducting analyses and forecasts for the Fed. As a result, they influence the formulation and execution of U.S. monetary and financial policies. Because of the nonpartisan nature of the Federal Reserve System, research and policy recommendations made by Fed economists are expected not to be influenced by the political leanings of those economists. Recently, however, research and speeches by the Fed economists are increasingly focused on climate change, gender, race, and inequality (Toomey 2021). Regional Federal Reserve banks and the Board of Governors of the Federal Reserve have conducted numerous seminars and conferences and published research papers on politically charged topics.1 Homepages of several Federal Reserve banks’ websites indicate their commitment to solving economic inequality, climate change, racism, and gender discrimination.2 For instance, the homepage of the Federal Reserve Bank of New York (n.d.) states:
The New York Fed stands in unity with all those who oppose racism, hate, and violence. We join them in a shared desire to root out the intolerable inequities and injustice grounded in systemic racism that persist in our society. We are firm in the belief that economic equality is a critical component for social justice and that we will never have the truly inclusive and strong economy we seek until access to health, education, safety, and justice knows no racial or other boundaries. We are dedicated to understanding and finding solutions to the numerous forms of inequity that communities of color experience and working with communities in our District to address deep-seated inequities. We are steadfast in our commitment to work for a more equitable economy and society for all, and will redouble our efforts in pursuit of this essential mission.
The Fed has been encouraged to do more to solve climate change, racism, inequity, and gender discrimination by politicians, including the current U.S. president (Schlesinger and Siddiqui 2020) and senior senators ( 2020). In fact, even the recent nominations to the Fed chair have been linked to these concerns (Swanson and Cochrane 2021). Former and current Fed chairs have reaffirmed their commitment to the political activism of the Fed on numerous occasions. For instance, former Fed chair Janet L. Yellen gave a speech on her concerns about inequality at the Federal Reserve Bank of Boston’s conference. In that speech she stated, “The extent of and continuing increase in inequity in the United States greatly concern me” (2014). Current Fed chair Jerome Powell also in a speech said the coronavirus crisis is worsening racial inequality and promised to reverse the massive U.S. job losses that have fallen most heavily on blacks and other minorities (Saphir and Marte 2020).
