Atlanta Fed President Raphael Bostic, the first Black president in the history of the central bank, wants policymakers to take action to address inequalities in the economy, he told Bloomberg in an interview; Bostic’s comments come amid a renewed push for the Fed, long viewed as the protector of the wealthy Wall Street elite, to do more to combat systemic racism and economic injustice.
Bostic, who Bloomberg notes has not spoken often about race during his three-year tenure at the Atlanta Fed, has become a strong proponent of making economic opportunity more accessible to all.
Last week, he wrote about his support for the Black Lives Matter movement and the steps the Atlanta Fed can take to combat institutional racism.
“Systemic racism is a yoke that drags on the American economy,” he wrote. “This country has both a moral and economic imperative to end these unjust and destructive practices.”
Bostic also echoed recent comments by Fed Chairman Jerome Powell, who said Tuesday that “the burden of the downturn has not fallen equally on all Americans.”
Historically, the central bank has drawn criticism for its crisis programs that disproportionately help the ultra-wealthy by propping up the stock market, while those on the lower end of the income spectrum face stagnating wages and rock-bottom interest rates.
The Black unemployment rate was 16.8% in May, the Labor Department reported. That’s more than 3 percentage points higher than the overall unemployment rate, which clocked in at 13.3%. And unemployment isn’t the only way Black communities have been disproportionately hurt by the coronavirus pandemic. Black-owned small businesses have gone under at nearly twice the rate that white businesses were forced to close, for instance, and Black homeowners missed or deferred mortgage payments at more than three times the rate of their white counterparts.
“A commitment to an inclusive society also means a commitment to an inclusive economy. Such an economy would represent a rebuke of systemic racism and other exclusionary structures. It would represent a true embrace of the principles that all are created equal and should enjoy unburdened life, liberty, and the pursuit of happiness,” Bostic wrote last week.
As the coronavirus recession has worsened an already severe racial wealth gap and protests over racial inequality continue to swell across the United States, calls for the Federal Reserve to adjust its mandate to be more sensitive to racial inequality are gaining steam. The Fed is bound by a “dual mandate”—it’s required to make decisions that keep unemployment low and prices stable (the latter is possible by controlling inflation). Economist Jared Bernstein, an advisor to Joe Biden, and Janelle Jones of Groundwork Collaborative said in a recent report that the Fed should consider targeting the Black unemployment rate, not just the overall unemployment rate, when it makes policy decisions because the Black unemployment rate is a more accurate indicator of economic conditions for all groups. “Both the economic and health outcomes of the coronavirus crisis will be, as is so much else in America, racially determined,” they wrote. “Our policy response must recognize this reality and intervene aggressively.” Bostic told Bloomberg that he’s studying a proposal that would have the Fed target Black unemployment.