Don’t Bet on a Quick Recovery
As financial markets seized up and economic activity halted in the face of the coronavirus pandemic, the Federal Reserve took unprecedented action: It dropped interest rates to zero, bought billions of dollars of government debt, and set up an alphabet soup of emergency facilities to pump liquidity into the financial system. In some ways, that was the easy part. The central bank is tasked with keeping inflation in check and helping the economy achieve full employment. The country is now facing the most severe jobs crisis in 90 years, and the worst-off families are the hardest hit.
Mary Daly is the president of the Federal Reserve Bank of San Francisco. (She does not sit on the Fed panel that sets the country’s interest rates, but will next year.) As a labor economist and a policy maker, she has been vocal about using the tools of government to address financial inequality, and about the “diversity crisis” in economics.
We discussed this unusual recession, the limits of monetary policy, and representation at the Fed. This interview has been lightly edited for clarity and length.
Early June brought some glimmers of hope that we might have a more V-shaped recovery. Employment and consumer-spending data seemed
