The conventional wisdom that inequality is a problem for elected officials and beyond the reach of central bankers may be backward, said the chairman of the Federal Reserve Bank of Minneapolis, Neel Kashkari.
"Historically, the Fed has always said that distributive outcomes are the domain of monetary policy: they are the domain of fiscal policy, and monetary policy only works around the corner," Kashkari said on Monday. interview. "In fact, I'm concluding that it's just the opposite."
Kashkari's argument marks his last fair against the majority opinion within the Fed, where he has become the most strident advocate of low interest rates since he began working there in 2016. He dissented against the three increases of Rates this year on the basis that inflation is well below the Fed's 2 percent target, and published an essay on Monday that added to that criticism concerns about a flattening yield curve.
This year's trend The increase in employment rates coupled with low wage growth and inflation "will probably continue in 2018", which would alleviate the need for additional increases next year, said the head of the Fed from Minneapolis. With inflation expectations so low, I would prefer not to raise rates again until the so-called core inflation, which excludes the volatile prices of food and energy and was only 1.4 percent in October, will rise to 2 percent, he added.
Low rates  The belief that monetary policy can be a powerful tool for addressing inequality would broaden the argument in favor of low rates. The policy makers of the Fed have long assumed the position that it is not their job to encourage greater income or wealth equality. Rather, its mandate from US lawmakers is maximum sustainable employment and price stability.
Maintaining its focus on these results without impairing the impact on who wins and who loses in the economy in the past helped isolate the Fed from politics. But its crisis-era, zero-rate policies and massive bond purchases have been blamed for increasing inequality by raising share prices, while wage growth remained anemic.
Fed officials say their actions helped millions of Americans get jobs, and point to an unemployment rate close to a 17-year low. With the labor market functioning, Kashkari says the central bank should continue to provide monetary policy support, because companies are beginning to invest in workers in ways they might not otherwise have.
"You are seeing a price signal sent to the whole economy, where there are many private sector companies that do different things to try to attract workers," said Kashkari, who this year launched the Institute of Growth Opportunity and Increase in The Minneapolis Fed to investigate why some groups are losing the benefits of the expansion.
"Perhaps monetary policy needs to establish economic conditions where all these private sector players are doing their part," he said. "I am trying to think: can a tax policy program be developed that motivates these private sector actors to do all this work? And it is very difficult for me to think of one"