Perspectives from the Public Part of the Federal Reserve’s Review of Monetary Policy Strategy, Tools, and Communication Practices June 2020 FEDERAL RESERVE SYSTEM CONTENTS INTRODUCTORY NOTE FROM CHAIR POWELL . .v FOREWORD: FED LISTENS COVID-19 UPDATE . .vii PART 1: THE FED LISTENS INITIATIVE . 1 PART 2: EVENT SUMMARIES . 11 Federal Reserve Bank of Dallas . 11 Federal Reserve Bank of Minneapolis . 20 Federal Reserve Bank of Richmond . 27 Federal Reserve Bank of Boston . 36 Federal Reserve Bank of Philadelphia . 41 Federal Reserve Bank of New York . 45 Federal Reserve System . 48 Federal Reserve Bank of Cleveland . 57 Federal Reserve Bank of Atlanta . 68 Federal Reserve Bank of St . Louis . 75 Federal Reserve Bank of San Francisco . 91 Board of Governors of the Federal Reserve System . 97 Federal Reserve Bank of Kansas City . 101 Federal Reserve Bank of Chicago . 104 Update, Board of Governors of the Federal Reserve System . 109 PART 3: FEDERAL RESERVE SYSTEM RESEARCH CONFERENCE . 113 ABBREVIATIONS . 131 INTRODUCTORY NOTE FROM CHAIR POWELL In 2019, the Federal Reserve launched—for the first time—a review of the monetary policy strategy, tools, and communication practices we use to pursue our congressionally mandated goals of maximum employment and price stability . Reviews like ours are part of good institutional practice, providing an opportunity to take a step back and ask whether we could be doing our job more effectively . A central part of our review was Fed Listens, a series of events held around the country to consult with a range of organizations—employee groups and union members, small business owners, residents of low- and moderate-income communities, retirees, and others—on the effects that labor market conditions, inflation, and interest rates have on them . Our Fed Listens series concluded before the coronavirus (COVID-19) outbreak and its transmission around the world, with tragic loss and tremendous personal and economic hardship here in the United States and in other countries . At the time of the Fed Listens events, our country was experiencing the strongest labor market in 50 years and generating employment opportunities for many Americans who had not found jobs readily available in the past . One clear takeaway from these events was the importance of sustaining a strong job market, particularly for people from low- and moderate-income communities . Everyone deserves the opportunity to participate fully in our society and in our economy . In light of the rapidly changing public health and economic environments, the Federal Reserve held a virtual Fed Listens update on May 21, 2020, summarized in the foreword of this report . The remainder of the report reviews the Fed Listens events and shares important points that we heard consistently . The lessons we learned were never more urgent than today as Americans navigate through these challenging times . People have put their lives and livelihoods on hold during this public health emergency at significant economic and personal cost . While all of us have been affected, the burdens are falling most heavily on those least able to carry them . The Federal Reserve remains focused on its goals and on laying the foundation for a return to the strong labor market that we saw at the time of our 2019 Fed Listens conversations . Jerome H. Powell Chair, Board of Governors of the Federal Reserve System v FOREWORD: FED LISTENS COVID-19 UPDATE The Federal Reserve Board convened an event, “Fed Listens Update: How Is COVID-19 Affecting Your Community?” on May 21, 2020, to hear from a number of the panelists who participated in Fed Listens events in 2019 about the effects of the rapidly changing public health and economic environments resulting from the spread of the coronavirus (COVID-19) in the United States . The panelists—representatives of workers, education, affordable housing, retirees, small business, and community financial institutions—met virtually with Board members to share their perspectives on issues pertinent to the Federal Reserve’s congressionally mandated goals of maximum employment and price stability . A detailed summary of the event appears in Part 2 of this report . Key highlights are summarized here . Hard-hit Neighborhoods Low-income neighborhoods have been hit hard by COVID-19, with large job losses and high rates of infection . Jobs may be slow to return, and for workers in service industries that have been significantly affected—travel and dining, for example—some job losses may be permanent . For low-income workers who remain employed, jobs now entail greater demands and riskier working conditions . Adding to these concerns are school closings and an absence of childcare . Paying the Bills Many who have been laid off are benefiting now from the one-time stimulus checks and temporary increase in unemployment insurance (UI) benefits enacted in the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) . The supplementary UI will end this summer . At that point, it will be difficult for many families to meet their financial commitments—rent, food, utilities, and other payments—if the economic downturn continues and the benefits are not renewed . Education Apprenticeship programs for community college students in the Chicago area have allowed those students to remain employed during the COVID-19 crisis and work remotely . The option for working remotely is a privilege and is not widespread in lower-income, largely minority neighborhoods . Retirees Older Americans are very concerned about the health aspects of the pandemic and about the risks associated with reopening the economy too soon . They report greater concern about their financial situation than they did before the public health crisis emerged . Inequality Panelists expressed concern that the COVID-19 crisis will exacerbate existing inequality, especially for African American and Latinx communities . vii Fed Listens | Perspectives from the Public Challenges for Businesses in the Food Service Industry Demand for specialty food items is down even as the consumer grocery bill is higher . Restaurants are changing their offerings to reflect demand for takeout and delivery—including basic foodstuffs—and will need to modify floor space to permit social distancing in the kitchen and dining room . Premium pay is necessary in light of hazardous conditions and the magnitude of the supplementary UI benefits . Community Financial Institutions Community development financial institutions and community banks have been successful in helping their borrowers apply for and obtain loans under the Paycheck Protection Program (PPP), which has offered a lifeline for many small businesses . Community financial institutions have also deferred loan payments and made new loans and grants to small business customers . Financial Stewardship Community financial institutions are providing assistance and offering financial advice to many small business customers who lack familiarity with banking services, have no experience accessing their bank via the internet, or did not see a PPP loan as an option for them . viii PART 1: THE FED LISTENS INITIATIVE In 2019, the Federal Reserve began a broad review of the monetary policy strategy, tools, and communication practices it uses to pursue its congressionally mandated goals of maximum employment and price stability—the so-called dual mandate . The Federal Reserve undertook the review because the U .S . economy appears to have changed in ways that matter for monetary policy . Importantly, the general level of interest rates has fallen in recent decades in the United States and abroad to such an extent that many central banks, including the Federal Reserve, now have limited scope to reduce short-term interest rates when the economy deteriorates . The Federal Reserve undertook a review of its framework for monetary policy in order to consider what policy strategy will best enable the Federal Reserve to meet its dual mandate in the future, whether the existing monetary policy tools are sufficient to achieve and maintain the dual mandate, and how its communication about monetary policy can be improved . A key component of the review was a series of Fed Listens events aimed at consulting with a broad range of stakeholders in the U .S . economy . From February to October 2019, the Federal Reserve hosted 14 public Fed Listens events—one at the Board of Governors, one at each of the 12 Reserve Banks, and a System research conference at the Federal Reserve Bank of Chicago . Although the Federal Reserve regularly engages with a broad range of groups as part of outreach efforts focused on issues affecting specific communities, the goal of Fed Listens was for policymakers to engage directly with a range of individuals and groups on issues pertaining to the dual-mandate objectives of maximum employment and stable prices . The process of public engagement helped foster transparency of the review through communication with the general public, thereby enhancing the Federal Reserve’s accountability . In organizing the Fed Listens events, the System leveraged its existing network of contacts, and the events themselves brought attention to the regular interactions that the Reserve Banks and the Board already have with groups around the country . This report reviews the Fed Listens initiative, providing information about the format of and participants in the events, as well as the points that were highlighted consistently across the events . While many of the concerns raised by participants at the events lie outside the mandate of the Federal Reserve, participants offered insights into the effects that labor market conditions, inflation, and interest rates have on them, in ways that augment policymakers’ understanding of the effects of their monetary decisions on these populations . Structure of the Events As shown in the table, the formats and participants varied widely across the 14 Fed Listens events that the Federal Reserve System hosted between late February and mid-October 2019 . Most of the events featured one or more panel sessions with representatives of a wide array of groups and 1 Fed Listens | Perspectives from the Public organizations .