• The U.S. Federal Reserve officials warn that recent policy decisions contributed to rising wealth inequality in the U.S.
• Millions of Americans, especially lower-income households, struggle with higher borrowing costs and stagnant wages.
• Stock market gains and cheap mortgages mostly benefit wealthy Americans, leaving others behind.

U.S. Federal Reserve 

The U.S. Federal Reserve has openly recognized that its monetary policies in recent years have unintentionally widened economic inequality. Low-income households are facing growing financial pressure, a trend the central bank says it cannot reverse quickly.

During the COVID-19 pandemic, the Fed lowered interest rates to near zero to support the economy. This helped millions of Americans, particularly wealthier households, by boosting stock markets and keeping borrowing cheap. But the benefits were unevenly distributed, as renters and lower-income families had limited access to these gains.

Today, borrowing costs are significantly higher, yet roughly one-fifth of U.S. homeowners still hold mortgages below 3%. These individuals benefit from lower monthly payments and have steadily built wealth through property ownership. Meanwhile, households that rent or do not invest in the stock market have not seen comparable improvements in their financial situation.

Stock Market

The stock market continues to perform strongly, driven in part by ongoing investments in artificial intelligence and technology. Over the past three years, this has created substantial wealth for those invested in equities. For low-income Americans, however, wage growth has slowed, and economic opportunities have remained limited, according to data from the Federal Reserve Bank of Atlanta.

Affordability remains a major concern, with surveys showing that many Americans struggle with everyday living costs. Policymakers have started to acknowledge these pressures, but solutions remain complex. The Fed’s primary mandate is to ensure maximum employment and price stability, meaning addressing inequality is often an indirect and slow process.

Fed officials stressed that these outcomes were unintended. The central bank acted to protect the broader economy, and its recent rate hikes are aimed at controlling inflation. Still, the lasting effects of past policies continue to influence wealth distribution, particularly between homeowners and renters.