Mr. Fitzgerald stressed the Congressionally mandated assignment of the Federal Reserve Bank to maximize employment and create price stability. He began the briefing by noting the Federal Reserve was created by act of Congress in 1913. The Federal Reserve has the responsibility to regulate banks, provide financial services such as clear financial payments and be the lender of last resort.
Mr. Fitzgerald described the structure of the Federal Reserve system, explaining the Board of Governors and the 12 District Banks. He went on to explain the structure of the Federal Open Market Committee (FOMC).
Highlighting the challenges, the U.S. economy has faced because of the pandemic, Mr. Fitzgerald noted there is still a tight labor market with 2.9 million fewer employed than prior to the pandemic. Many people are still out of the work force perhaps because of fear of the virus or child care issues, etc. He believed the labor supply might increase during the course of the year as COVID recedes.
Inflation is usually targeted at 2 percent but is now around 5.8 percent. Talk of interest rate hikes to combat inflation is ongoing and may be impacted by persistent supply chain problems. The Federal Reserve is trying to assess if inflation is persistent or more transitory which will impact how aggressively it will act to try to combat inflation.
In answer to club members questions, Mr. Fitzgerald commented that Congress and the U.S. Government executive branch have the responsibility to deal with ballooning federal debt. He concluded the session by thanking the club for the opportunity to speak, but more importantly the club’s dedication in serving the Faribault Community.
