It was an event far removed from the esoteric academic debate that for decades has dominated gatherings of senior central bankers and academics at Jackson Lake Lodge.
On the eve of their annual symposium in Wyoming, Federal Reserve officials found their plans to tighten policy under assault from community activists, who accused them of compromising the interests of poorer citizens in a fight against an illusory threat of inflation.
In a meeting with the Fed Up coalition attended by 11 top US Fed officials on the eve of the Jackson Hole symposium, central bankers insisted they had no desire to halt the recovery but that they needed to act to prevent risky imbalances from emerging down the road.
However, in a packed and occasionally heated gathering in a sweltering hotel meeting room in Grand Teton National Park on Thursday, community activists argued that the Fed’s leaders needed to better understand the plight of ethnic minority Americans on low wages.
Rod Adams, an organiser from the Neighborhoods Organizing for Change in Minneapolis, said that while the economy had recovered for white citizens, African-Americans and Latinos were still lagging behind with higher rates of joblessness.
“You will be leaving us behind,” he said, accusing the Fed of “pulling the ladder right up after you have climbed it”.
He added: “I don’t want to be sacrificed in your war against an inflation enemy that isn’t here.”
The first-of-its-kind gathering was attended by Fed policymakers including Stanley Fischer and Lael Brainard of the Federal Reserve Board, Bill Dudley of the New York Fed, Dennis Lockhart of Atlanta, Rob Kaplan of Dallas and John Williams of the San Francisco Fed.
Esther George of the Kansas City Fed, which is hosting the annual Jackson Hole symposium of the world’s central banking elite, presided over the discussions. The Jackson Hole meetings are normally dominated by academic discussions about monetary policy. The Fed’s decision to hold the meeting with activists reflects a need not to appear out of touch during a presidential election year when there is growing pressure from both sides of the political divide.
Amid a recovery that many Americans see as badly subpar, Democrats have been lobbying the Fed to keep policy loose as long as possible, while some Republicans are warning that the central bank is risking a new crash by stoking up asset price bubbles with low rates and its stock of asset purchases.
The meeting was stacked with Fed Up activists from around the country wearing the group’s characteristic green T-shirts, with slogans including “We need a people’s Fed”, “Our communities are still in a great recession” and “Let our wages grow”.
The backs of some T-shirts depicted graphs showing America’s patchy record on wage growth.
The Fed Up group, which is an initiative of the Center for Popular Democracy, has held meetings with Fed officials in Wyoming in previous years, but the number of top policymakers in attendance was unprecedented.
Fed Up leaders say the central bank is unrepresentative of the US population given 16 of its 17 top policymakers are white, that it needs more women in top positions, that it remains too heavily influenced by commercial banks, and that it is threatening to slow a recovery that needs to continue if black and Latino unemployment rates are to be pulled down further.
Mr Dudley was blunt when confronted with evidence of the Fed’s largely white leadership. The diversity in the Fed system is “pretty lousy”, he confessed to protesters. “I completely believe in diversity and inclusion and we are working to do better,” he said.
However, he and other Fed officials insisted they were not trying to stop the economy from growing. Mr Williams said: “It takes a couple of years for monetary policy actions to have full effect. If we wait too long eventually this economy will create imbalances or overheat” — at which point officials could be forced to react sharply and drive the US into a recession.
Eric Rosengren, the Boston Fed president, agreed it was important while pushing for maximum employment to ensure excesses do not build up “to the point where you have another recession that hurts everyone in the room”.
However, Shawn Sebastian, field director of Fed Up, said the Fed should not be seeking to rein in Wall Street excesses with monetary policy, arguing that the people who would pay the price were “low-income workers of colour”.
Bill Spriggs, the chief economist of the AFL-CIO, said the Fed should “deliberately overshoot” on its economic goals in order to clear a backlog of unemployment among African-Americans.
Josh Bivens, an economist at the Economic Policy Institute who also attended the meeting, rejected arguments that the US was at risk of overheating. He said: “We should be greedier about grabbing the benefits of full employment.”
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