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06/21/2017 | Building a National Campaign for a Strong Economy: Fed Up

Janet Yellen Commits to Reconsidering Decision Making Framework of Federal Reserve

"This is an amazing accomplishment. One more for Fed Up! The results Fed Up has achieved were impossible to imagine four years ago."
- Larry Mishel, President of the Economic Policy Institute 

When the Federal Reserve raises rates and slows down job growth and wage growth and sacrifices opportunities for Black and Brown communities, its primary justification is the 2% inflation target. But what if the Fed reconsidered that target? It's a radical idea, one that Janet Yellen and the Federal Reserve have consistently shot down. But that was before Fed Up organized prominent economists in the ivory tower and Black and Brown workers in the streets to challenge the underlying logic of Fed decisions.

Fed Up's campaign success was highlighted in Bloomberg, The Wall Street Journal,The Atlantic, Buzzfeed, and many more. You can see the full press round up below.

According to Business Insider, this is a major shift that will have massive economic benefits for working families "and one that will have significant long-term implications for Fed policy. A higher inflation target would mean the central bank can provide additional stimulus to the economy in a downturn, potentially helping to prevent slumps that are as deep as the Great Recession, which wiped out 9 million jobs and left financial and social scars many Americans are still nursing."

We began pulling together the groundswell by organizing 22 prominent economists - including Nobel prize winners, former Fed officials, and former Obama administration economists - to sign a letter calling on the Federal Reserve to reconsider it's 2% inflation target. The broad consensus from a range of some of the most qualified economists in the world - many of whom are former colleagues of members of the Federal Reserve - captured the press's attention on Friday, June 9. We capitalized on the press cycle by continuing to promote the letter on social media under the hashtag #Rethink2percent and a broader range of high profile economists - like Paul Krugman - joined the discussion and voiced their support throughout the weekend.

Then on Monday our coalition rode the momentum generated in the Ivory Tower and took it to the streets with three coordinated actions at Federal Reserve Banks in New York City, Washington DC, and Philadelphia which generated local TV coverage on Univision, ABC in Philadelphia, NY1, and Nuestra Tele Noticias (NTN). This was the first time we were able to break into local TV coverage on monetary policy issues!

New York Communities for Change and Make the Road New York lead a march around the New York Federal Reserve with large inflatable "2" balloons representing the 2% inflation target and #GovernmentSachs banners. Latino workers questioned why 4 of the 9 members of the Federal Open Market Committee (FOMC) setting interest rates - including New York Federal Reserve President William Dudley - were from Goldman Sachs and why they set the arbitrary target of 2% to decide whether or not the economy should create more jobs and higher wages. See Getty Images here.

At the same time, in Philadelphia, One PA, led a rally addressed to Philadelphia Federal Reserve President Patrick Harker, another voting member of the FOMC who is a Goldman Sachs alum. Protestors told President Harker that when he raises rates, based on the outdated 2% target, Black communities who are still struggling suffer the most. One PA dumped pink slips at his door representing those who would be most hurt by his arbitrary decisions. Check out this clip from ABC in Philadelphia!

Finally, in Washington DC, members of SPACEs DC held a ralley outside the Board of Govenors building and asked the Fed to "Show us your math." They handed out the economist letter to Fed staffers on their lunch break and challenged them through powerful testimony to justify how the Fed could make decisions affecting the lives of workers based on a benchmark that didn't make sense. Check out this clip from Univision! 

All that pressure - from former colleagues, administration officials, workers, Black and Brown communities, in national papers like the Wall Street Journal, all over Twitter, and even on local TV, - built towards a press conference that Janet Yellen held on Wednesday, June 14. When NPR's Marketplace asked her about our letter and the rationale behind the 2% inflation target Chair Yellen responded, "This is one of our most critical decisions and one we're attentive to evidence and outside thinking. It's one that we will be reconsidering at some future time."

That is how Janet Yellen is starting to warm to a policy the Fed once regarded as radical.

Although the Federal Reserve decided to hike rates last week, Chair Yellen's policy shift is a potentially much a more consequential decision for working families across the country.

In Solidarity,
Shawn Sebastian
Co-Director, Fed Up Campaign