US lawmakers including Senator Elizabeth Warren and Democratic presidential candidate Bernie Sanders on Thursday sent a letter to Federal Reserve Chair Janet Yellen urging more diversity at the USA central bank.
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A Fed spokesperson responded to the letter with the following statement: “The Federal Reserve is committed to fostering diversity-by race, ethnicity, gender, and professional background-within its leadership ranks”. “I think we need to be somewhat cautious when inferring a signal about changes in inflation expectations from these market measures”, she said, adding that there is also a lack of liquidity in the Treasury inflation-protected securities market. Warren and Sanders are the most outspoken Democratic critics on economic and financial issues. Elizabeth Warren of MA and Rep. John Conyers Jr. of MI led the effort to draft the letter.
The Fed Up campaign, a coalition of progressive groups headed by the Center for Popular Democracy that has been at the forefront of recent efforts to make Federal Reserve reform a key part of the liberal agenda, confirmed that it has been in talks with the Clinton campaign for months.
All 10 voting members this year of the Federal Open Market Committee (FOMC), the monetary policy-setting body that includes Fed governors and a rotating set of regional Fed bank presidents, also are white and six are men, the letter said.
The comments by Rosengren, a voting member this year on the Fed’s rate-setting committee, point to growing pressure within the US central bank to raise rates in the coming months.
“Minority representation on Reserve Bank and Branch boards has increased from 16 percent in 2010 to 24 percent in 2016”.
“If the economic data that come in over the course of this quarter confirm these trends, it will be appropriate to continue the gradual normalization of monetary policy”, Rosengren said in prepared remarks, using the term US central bankers employ for interest rate hikes.
Regional presidents are appointed by the directors of each Fed bank.
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The lawmakers said they appreciated her concern about diversity but urged her to do more. “That’s why Secretary Clinton believes that the Fed needs to be more representative of America as a whole as well as that commonsense reforms – like getting bankers off the boards of regional Federal Reserve banks – are long overdue”. Regional Fed bank presidents are nominated by their local boards by members representing firms not regulated by the central bank, subject to the approval of the Fed board in Washington. Secretary Clinton will also defend the Fed’s so-called dual mandate – the legal requirement that it focus on full employment as well as inflation – and will appoint Fed governors who share this commitment and who will carry out unwavering oversight of the financial industry.
