The Federal Reserve’s so-called dual mandate to maintain overall price stability and maximum sustainable growth in U.S. employment is always on the minds of the U.S. central bank’s Federal Open Market Committee. The 12-member FOMC sets benchmark interest rates, which indirectly affect both inflation and the U.S. labor market. But the reverse also is true: How members of this committee communicate their views on achieving their dual mandate to the U.S. public can indirectly affect future macroeconomic trends.

A new working paper in Equitable Growth’s Working Paper series examines the importance of communicating Fed macroeconomic forecasts through the lens of racial and gender diversity. Specifically, the three co-authors of the new working paper— Francesco D’Acunto at Boston College’s Carroll School of Management, Andreas Fuster at the Swiss Finance Institute, and Michael Weber at the University of Chicago’s Booth School of Business—examine whether the race and gender of FOMC members who communicate their views on inflation and unemployment influence the beliefs of diverse members of the U.S. public when it comes to their subjective views on inflationary expectations and the level of unemployment. As the three co-authors note, policymakers stress the importance of the public’s “trust in the central bank for an effective transmission of monetary policy, and public trust is a necessary condition for central banks’ independence.”

The new research, “Diverse Policy Committees Can Reach Underrepresented Groups,” finds that Black men and women and White women are much more likely to align their economic expectations with that of FOMC members from a diverse demographic of the members who took part in the approval of the Fed’s macroeconomic forecast. Yet the three co-authors also find that Hispanic respondents and White men trusted the views of FOMC members regardless of their race or gender.

Read the full article about diversity at the Federal Reserve at Equitable Growth.