Powell Stresses Fiscal Better Positioned to Take On Racial Inequality

Q: Is a 6.1% unemp rate for African Americans consistent with full employment, or would need to be lower as part of inclusive strategy?

- A: The point of the broad and inclusive goal was not to target a particular unemployment rate for any particular group. We look at a broad range of metrics when we think about what maximum employment is. One is unemployment rates and participation rates and wages for different demographics and age ranges. We will do all of that.

• If you look at the last 2-3 years before the pandemic hit, you saw a strong labor market, the lowest unemployment rates for African Americans, for example, and also participation rates. There was no reason why it couldn't continue. The country would really benefit from a few more years of this.
• We said we wouldn't raise rates just in response to very low unemployment in the absence of inflation. That was another aspect, because that really benefited labor market participants in a broad and inclusive way. We have significant slack in the economy and inflation well above target, not moderately above target. That is how we think about it. We would love to see no employment gap.
• But we have famously broad and blunt tools. I think eliminating inequality and racial disparity is really something that fiscal policy and educational policies are better focusing on.