Press conference exchange between STEVE MATTHEWS and Fed Chair Jerome Powell:

user: Thank you. Chair Powell, I wanted to ask about the inclusive monetary policy framework. In particular, Bloomberg surveyed economists, and we found that they predict liftoff will happen when the U.S. unemployment rate is 3.8 percent but the Black unemployment rate is 6.1 percent. And I’m wondering if a 6.1 percent unemployment rate for African Americans is consistent with full employment or whether it would need to be lower as part of your inclusive growth strategy.

assistant: Right, so the point of the broad and inclusive goal was not to target a particular unemployment rate for any particular group. Really, we look at a broad range of—a very broad range of metrics when we think about what maximum employment is. And one of the things we look at is unemployment rates and participation rates and wages for different demographic and age groups and that thing. So we will do all of that. So I think if you look back, what were we really thinking? So we all saw the benefits of a strong labor market. If you look at the last two or three years of, before the pandemic hit, you saw—after a lot of long progress, you saw a really strong labor market. And you saw wages at the low end moving up faster than everywhere else—something that’s great to see. We also saw the lowest unemployment rates for minorities of various, you know, for African Americans, for example, and also participation rates. We saw a really, really healthy set of dynamics. And, by the way, we also—there was no reason why it couldn’t continue. There were no imbalances in the economy, and then along came the pandemic. We were not—there was nothing in the economy that looked like a buildup of imbalances that could cause a recession. So I was very much thinking that the country would really benefit from a few more years of this. It would have been—so we’re all quite eager to get back to that. We also said we wouldn’t raise rates just in response to very low unemployment, in the absence of inflation. So that was another aspect of it, because we saw really benefited labor market participants in a broad and inclusive way. That’s, of course, not the current situation. We have significant slack in the economy and inflation well above target, not moderately above target. So that’s, really, how we think about it. It isn’t really just targeting the headline numbers, but it’s about taking all of those things into account in your thinking about what constitutes maximum employment.

user: Just to follow up, should there be a significant gap between Black unemployment and overall unemployment for structural reasons that are outside of the control of the Fed that other people should be doing something about? Or should that be— should the gap be narrowed, if not down to zero?

assistant: Well, you really—I mean, first of all, ideally, there wouldn’t be any gap, of course. We would all love to see no such gap. This is a persistent gap, and it’s very hard to explain based on typical metrics. It’s just, it’s quite troubling, but it really is—you know, we have, you know, famously broad and blunt tools. I think eliminating inequality and racial discrimination and racial disparities and that thing is really something that fiscal policy and other policies—frankly, education policies and that thing—are better at focusing on. I think we’ve identified the part that we can do, and we’ll do that part. But I’ve always been clear that it’s going to take policies broadly across society to work on these problems.