What indicators to monitor if the Federal Reserve aims to reduce inequality?
The Federal Reserve has repeatedly mentioned that reducing inequality is one of its core objectives. So what indicators to monitor to find out when the Federal Reserve believes its objective is met and can move to a less expansionary monetary policy? At the macro level, there will have to be sufficient improvement in the labour market so that real wages rise faster than productivity, which reduces inequality between recipients of labour income and recipients of capital income; At a more granular level, one has to compare the unemployment rates of whites, African-Americans, Hispanics and Asians, as crises have a greater detrimental effect on the labour market situation of some minorities. At present, these indicators suggest the Federal Reserve is still far from judging that it has sufficiently reduced inequality.