Anne Price, President of The Insight Center for Community Economic Development, talks about the Fed's approach to tackling inflation and how the policy changes disproportionality impact low-income and multicultural households. 

Opening Bell

Economic Growth Prospects in the U.S. Amid Record-High Inflation

here to discuss and price President at the insight center for Community Economic Development and glad to have you on this morning the chances of the Fed not kind of raising interest rates every meeting this year that that's highly unlikely at this point. However many FOMC members are now starting to kind of call for these hikes Of 50 basis points or more at some of these meetings. I'm curious what are your thoughts, you know, on the feds, the Feds approach to taming inflation? Yeah. You know, I think we have to think about this as perhaps um misdiagnosing the problem and also kind of prescribing the wrong medicine now. What we're seeing right now is not what we typically think that cheap credit that is allowed uh you know, spending to outweigh our ability to produce what people want to buy. We know this is really due to supply chain issues and that's affecting american consumers. And so do we really have the wrong kind of medicine for this? This problem that we're seeing in our economy that we may have miss misdiagnosed? Yeah, I think the challenge there is, the Fed really doesn't have any leverage to pull um and supply chain issues certainly they just take far longer to, to, to kind of address. But I'm curious, kind of even given with that, one of the challenges, you see, um you know, facing the economy this year with the idea that the Fed is going to continue to raise rates. Yeah, I think we have to really be concerned about low wage workers in this environment. The fact that we know that they're really being hit hard by inflation. Um it's hitting their pocketbooks every day, but we also want to really be careful about what's going to happen potentially with hiring if the economy slows down and we know who may be most affected, it might be those with the lowest wages. We also know that various communities, particularly black workers may suffer under um these higher interest rates, right? That means that if the economy slows down, they may be squeezed out of the labor market, we know that they are hired um and less likely to face discrimination when labor markets tighter. So this could have an outsized effect on various communities. You know, to your point there actually, the Atlanta Fed chair, Raphael Bostic, an economist whose work really does focus on racial disparities, certainly access to capital. Uh you know, they've been really outspoken about how policy decisions impact marginalized communities I think, saying in an essay a few years ago that systemic racism is the yolk that drags on the american economy. What is your take on that, You know, given the picture that we're dealing with right now, and we know that marginalized communities over the past two years, even amid, you know, some surplus or even amid um you know, remedies throughout this pandemic have been disproportionately impacted. Yes. Um certainly mr Bostic is absolutely right. The Fed doesn't really have the kind of policy control to be as targeted um to face kind of systemic racism and discrimination in our economy. But they have added this mandate, this broader and inclusive mandate to their congressional mandate to help all americans be employed. And we know that in the case of of of higher interest rates, that that may not be the case, that some some folks may suffer. So the reality is is that the Fed may not have the right tools to deal with systemic racism, but have recognized that that is a problem in our economy and affects a number of workers. Last week we saw Sarah bloom Raskin revoke her candidacy for the Federal Reserve Board following obviously the partisan battle over um kind of her confirmation in the Senate and of course that hinging on her views on climate change, what do you make of her move to withdraw and how do you see this impacting this overall experience? And certainly diversity on the Fed? Yes. It was very disappointing to hear that she was um going to remove her name. We know that also that there was probably false information and kind of her opinions twisted, particularly as it was concerned by oil and gas industry. And so this is a real problem that um you know, other possible candidates can have and they're kind of public discourse around the economy. We know we've seen that a bit with lisa Cook, who is an amazing economist who has done some work and looking at um racism and violence, um and how it affects the economy. But these are all outstanding folks that should actually be nominated. So it does raise some concern about even future candidates. We've had to let you go here. What do you think can be done to further economic inclusion for multicultural families, women, immigrants and those in low income households as kind of the government works its levels, so to speak here amid this reopening and recovery from the pandemic. Yeah, I know we have to really think about the other mandate of the Fed which is employment. And we know time after time when we're in a situation of of like we were during the great recession that some workers may not recover as quickly. And we were really seeing almost black, you know, workers, even though their unemployment rates are double, those of whites could have really reached almost full employment, something we haven't seen in decades. And so we need the kind of policies that and the arm that in the mandate that the Fed has to help all americans be employed. Um and that's really something that we have in our arsenal that can be used to help marginalized communities and really appreciate your insight and price. President and in at the insight center for Community Economic Development