Despite the positive momentum, many people have remained on the sidelines or have seen only modest pay increases. By lowering rates, the Fed hoped to protect the economy against potential risks to ensure that it keeps growing. The move could foster a labor market that continues to draw in disadvantaged workers while prodding companies to raise wages.
“The best thing we can do for those people is to sustain the expansion, keep it going,” the Fed’s chair, Jerome H. Powell, said after the move. “That’s one of the overarching goals of this move – and all of our policy moves.”
The wealthiest also benefit from the Fed’s decision, since rate cuts push up stock prices, creating big gains for investors. But the central bank’s push to portray its policy as a win for rank-and-file workers highlights an evolution: The Fed is trying to be more attuned to the needs and attitudes of everyday Americans.
Some of the changes are superficial. Mr. Powell, previously referred to as “chairman” in the Fed’s post-meeting releases, is now a gender-neutral “chair.” The 17-member policymaking body is as diverse as it has ever been, with leadership roles held by two openly gay members, five women, one black member and one person with Indian heritage. The powerful Federal Reserve Bank of New York flew rainbow flags outside for pride month this summer, for the first time.
A visit to the Federal Reserve Bank of Atlanta’s Instagram account shows that it is following up its #dogsofthefed campaign with a #humansofthefed one, complete with inspirational stories and not-so-candid snaps.
But something more significant is happening under the surface.
An institution long shrouded in mystique and hemmed in by its desire to remain above the political fray is opening up. Fed research has long hit on diverse and even hot-button topics – from social mobility to global warming – but presidents at its 12 regional banks increasingly promote and publicize that work. They even occasionally take positions on issues like immigration and skills training.
Fed officials have also spent much of the year visiting community groups in places like Augusta, Ga., and Camden, N.J., part of a widely publicized campaign aimed at convincing the public that policymakers are listening to workers’ concerns. Officials now regularly talk about unemployment rates by race and gender.
A political calculus is at play. The Fed needs to shore up public support at a time when President Trump regularly criticizes its actions and when government bodies – especially opaque ones aligned with bankers – are anything but popular. It has come under congressional and popular pressure for being slow to diversify and not focused enough on the most economically disadvantaged.
Mr. Powell nodded to those challenges in a recent speech in Paris, saying, “Our audience has become more varied, more attuned to our actions and less trusting of public institutions.”
America’s shifting social discourse also enables the Fed’s evolution. Janet L. Yellen, the Fed’s first female leader, broached the topic of income inequality in an October 2014 speech, questioning whether it was consistent with American values. It was an unusual topic for a Fed leader to take up at the time, and Republican lawmakers chastised her.
“You’re sticking your nose in places that you have no business to be,” Mick Mulvaney, a South Carolina representative at the time and now Mr. Trump’s acting chief of staff, told Ms. Yellen during her testimony to the House Financial Services Committee the next February.
Representative Sean Duffy, a Wisconsin Republican, said the speech showed political bias because Democrats were campaigning on the issue ahead of the midterm election.
Five years later, Fed officials frequently talk about income inequality. In February at a forum with teachers in Washington, Mr. Powell echoed Ms. Yellen’s sentiments – but got no pushback.
“We have work to do to make sure that the prosperity that we do achieve is widely spread,” Mr. Powell said. “We need policies that can make that happen.”