- Wall Street increasingly has noticed that the Fed is continuing to expand on its mandate of price control and full employment.
- Over the past year, the central bank has taken on climate control and ensuring that employment growth is spread evenly through society.
- The new agenda closely mirrors values espoused by former Fed chair and current Treasury Secretary Janet Yellen.
- “Since 2008, they have capitulated on so many fronts I don’t even recognize the institution anymore. The bank I worked for is gone,” said Fed veteran Christopher Whalen.
- Fed officials stress their independence and insist they are not guided by political pressure.
The Federal Reserve seems to be having an identity crisis.
Not that long ago, the U.S. central bank was seen solely as a watchdog of the nation’s financial system as well as the entity charged with using its various policy levers to control inflation and keep unemployment low.
Nowadays, well, things have changed.
In recent months, the Fed has extended its responsibilities as a bank regulator to the fight against climate change. Where once the Fed used its power over interest rates to control inflation and keep borrowing costs low, it now is taking on the role of making sure job gains are spread equally among income, racial and gender groups.
If this doesn’t sound like your parents’ Fed, or even legendary former Chairman Paul Volcker’s, you’re not alone.