Five questions for Kristin Pruitt President, Lake City Bank

1 You were announced on Jan. 14 as a new board member for the Federal Reserve Bank of Chicago, set to serve a three-year term. How did this opportunity come about, and what excites you most about it?

A: There are three directors on the Federal Reserve Bank of Chicago Board who are elected to represent the member banks, and a vacancy was created when one of those directors completed his second three-year term. I was honored to be nominated to fill that vacancy, and I was elected in October by banks who are members of the Seventh Federal Reserve District.

I'm very excited to bring my insights about what is happening in Indiana to help the policymakers understand the real-life, human side of the data that they are working with to make decisions.

2 From your perspective, what do you think people should better understand about how the Fed operates and its impact on everyday financial decisions?

A: The Fed is often in the news because of its role in establishing interest rates, but rate-setting is only a part of what the Federal Reserve System does.

In fact, the Fed is responsible for conducting monetary policy, promoting the stability of the financial system, and regulating banks. The 12 Federal Reserve Banks, including Chicago, all play a role in both the collection of data and research but also the operation of the banking services to banks across the country.

The Fed plays a key role in fostering a modern, reliable and safe payment system that is vital to all of us.

3 What are the biggest economic challenges facing the Midwest, and how do you hope to address them in your role?

A: The Midwest continues to be a place of opportunity in the United States, with relatively low cost of living and low unemployment.

Some of our communities in Indiana are seeing some population growth, which is encouraging. But, of course, we have economic challenges as well, including housing shortages and an aging workforce.

Those factors directly impact prices and employment, and that is exactly the mandate of the Fed to consider. So, the Fed will use its available tools to combat those challenges.

As a director, it's my job to share what I'm seeing on the ground here in Indiana to provide context to the monetary policy decision-making.

4 As a leader of a regional bank, what insights do you bring to the Fed about the economic needs of local businesses and communities?

A: At Lake City Bank, we do business with consumers and business of all shapes and sizes - from very large businesses to mom-and-pop local businesses. And because we live, work and play alongside our customers, we have a really good sense of how things are going. We know their challenges and their opportunities, what they're excited about and what they're afraid of.

My ability to tell the stories of our customers to supplement the data (which is always backwards looking) helps the economists make better forward-looking decisions.

5 How will your banking and regulatory experience shape your contributions to the Fed's discussions on monetary policy and economic conditions?

A: First, I should say that the Chicago Fed board plays no role in oversight of bank supervision and regulation.

I have a good understanding of the United States banking system and the role of the Fed system based on my experience as a banker.

Of course, that also means I have insight into points of friction or inefficiency, particularly as they relate to operational issues in the payment system.

I also have a lens into macroeconomic conditions, such as labor force availability or supply chain challenges, that can create headwinds (or tailwinds) for our business community or for particular sectors of the economy.

And one of the benefits of getting older is that now I've seen some complete economic cycles so I have a little better perspective and can look for leading indicators of change.