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Levitating stocks unlikely to help Fed's economic equality efforts

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U.S. Federal Reserve chair Jerome Powell tried to address economic inequalities in his landmark policy move. Still the Fed holding rates lower-for-longer may support bulging asset prices - which is unlikely to benefit the neediest and could well widen the wealth gap in the near term.

FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis/File Photo

An analysis of 2016 Federal Reserve data by Edward Wolff, an economics professor at New York University, said that 84% of stocks owned by U.S. households are held by the wealthiest 10% of Americans, limiting the power of a stock market rally to turn into broad gains in household wealth. Still, it may take years for that strategy to pay off for workers at the lowest echelons of the job market, often women and people of color who account for a disproportionate share of low-wage jobs. But the payoff for the asset-holding class is already underway.

Investors noted the limits to what the Fed can achieve on its own and stressed the importance it comes alongside fiscal policy.

 

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