After years of lagging other central banks, the Fed has ramped up its research on climate change and is actively considering the risks that a warming planet poses to financial stability. In the past year, bank officials created a climate committee, joined a key global group of central banks on the issue and began working with the Treasury Department on Biden’s climate executive order.
But that has failed to appease progressive Democrats, some of whom opposed Powell’s renomination before it was announced. They want the Fed to be far more active in fighting climate change. Some Republicans, meanwhile, have accused the central bank of mission creep.
Inequality
The Fed is also caught in the political crosshairs in the debate about income and racial inequities.
Policy makers have been far more forthright than in the past about the deleterious effects such disparities can have on the economy. And, as part of their new monetary framework, they’ve broadened their definition of their maximum employment goal to make clear they’re seeking “broad-based and inclusive” job gains.
But they’ve faced criticism from the left for contributing to the very income inequality they decry by pursuing an aggressive quantitative-easing program that has pumped up the prices of stocks and other assets mainly held by the rich. And they’ve been attacked for being a largely White man’s club short on racial and gender diversity.
Biden could address these issues in coming weeks. He will announce his pick for Fed vice chair of supervision along with additional nominations for open seats on the Board of Governors beginning in early December, the White House said Monday.
Democrats have also been urging the central bank to improve diversity among the Fed’s leadership with its picks of presidents to head the Dallas and Boston reserve banks, while Republicans are warning it to not be swayed by political pressure.
--With assistance from Katia Dmitrieva.
This article was provided by Bloomberg News.