With inflation running low, the Federal Reserve has an opportunity to create many more jobs, including for African-Americans and other groups with chronically high unemployment, a top central bank official said Wednesday.
“I’ve looked at this as an opportunity for greater maximum employment, in a context … in which inflation is not at our target,” Federal Reserve Gov. Daniel Tarullo said Wednesday at an event in Washington.
“This is not an economy that’s running hot — this is not the late ’70s,” Tarullo said, arguing that the Fed is not risking the kind of out-of-control inflation that hurt the country in the 1970s by targeting low interest rates.
The Fed’s mandate, Tarullo mentioned, is to pursue maximum employment, meaning that it should aim to see as many jobs created as possible without violating its other mandate, which is stable inflation.
Inflation has run below the Fed’s 2 percent target since 2012.
Given the low-inflation environment, Tarullo said, “we have the opportunity to create more jobs,” especially for African-Americans and Hispanics. While overall unemployment is at 4.7 percent, it remains at 8.2 percent for African-Americans and 5.6 for Hispanics.
While other members of the Fed have suggested that it will be necessary to slowly raise rates in order to keep up with the growing economy and prevent inflation from rising uncontrollably, Tarullo isn’t as worried.
“For some time now I have thought that it was the better course to wait to see more convincing evidence that inflation is moving towards, and would remain around, the 2 percent target,” Tarullo said.
Fed Chairwoman Janet Yellen has staked out a slightly more “hawkish” stance, saying that she expects that rate hikes will likely be needed this year in order for the Fed not to fall behind unfolding economic events.
As a Fed governor, Tarullo has a permanent voting spot on the Fed’s monetary policy committee.
