RICHMOND, Va. (WRIC) — Inflation has forced us all to watch our spending and watch interest rates. The federal government has been hiking these rates to fight back against high prices, but did you know the city of Richmond plays a key role in helping the fed make that decision?
The towering silver skyscraper that is a signature feature of the downtown Richmond skyline houses the Federal Reserve Bank of Richmond, also called the Richmond Fed. It is one of only 12 in the entire country, including others in New York City, Atlanta and San Francisco.
Around 2,700 people work for the Richmond Fed, and they oversee banks from South Carolina to Maryland by lending money, distributing cash and coins and processing electronic payments. Think of it as a bank for your bank.
The work that goes on at the Fed impacts you every time you open your wallet. Deep underground in the Fed is a center buzzing with activity called the cash processing center. Staff in this room handle millions of dollars that all comes from banks and ATMs. High speed currency processing machines filter through 40 bills a second, destroying any old bills and sending the others back out to be used by the public.
If you’ve ever handled cash, chances are it was processed in this room or in a room just like it across the country. Each dollar bill has a letter designation that corresponds to a Federal Reserve Bank, so if you spot a bill with the letter ‘e’, that means it was issued from Richmond.
Aside from distributing and lending, one of the most important duties of the Federal Reserve Bank of Richmond is led by its CEO, Tom Barkin.
“Congress has mandated us to be the engine of trying to control inflation,” Barkin said.
The Richmond Fed advises the Federal Government on whether to raise or lower interest rates. Barkin spends a lot of time gathering data by being out in the community, talking to everyone from bank presidents to small business owners.
“We try to understand what’s actually happening on the ground and the questions I’m asking are questions like ‘are you hiring or firing people?'” Barkin said. “That helps you understand what’s happening to the labor market.”
Together, America’s 12 federal reserve banks share their observations with the Fed in Washington, D.C., which then determines a new interest rate.
Even with all this work, Barkin says it remains to be seen whether we will see a recession.
“The U.S. economy is a very strong and solid economy,” he said. “We may or may not have a recession, but if we do, most forecasters think that would be a modest one, and on the other side of that is an economy that feels more normal.”
Barkin says history has shown it is very hard to predict a recession. So instead of worrying about that possibility, he is staying hopeful and focused on helping the mid-Atlantic region right now by lowering inflation.