Ex-RBI Governor Raghuram Rajan gets key US Fed advisory role
What's the story
Former Reserve Bank of India (RBI) governor Raghuram Rajan has been appointed to a key role in the US Federal Reserve's reform initiative. The move comes as part of a broader effort by newly appointed Fed Chairman Kevin Warsh to reshape monetary policymaking after years of high inflation. Rajan will be joined by two other Indian-origin experts, economist Raj Chetty and Microsoft executive Asha Sharma.
Reform strategy
Warsh says honored to have best minds on board
Warsh, who announced the formation of five task forces, said he was honored to have some of the best minds from different fields agree to work with him.
He added that the goal is simple: to make sure the Fed is well-placed to accomplish its goals in these important times.
The task forces will look at communications, balance sheet policy, use of economic data, productivity and jobs, and inflation framework.
Task assignment
Rajan will be part of balance sheet policy task force
While Warsh didn't elaborate on Rajan's specific role, PTI reported that he will be part of the balance sheet policy task force.
The panel will also include Harvard economist Karen Dynan and former Federal Reserve Governor Jeremy Stein.
It will look at the costs, benefits, and institutional implications of the Federal Reserve's current balance sheet regime including its asset holdings and their role in implementing monetary policy.
Profile
Rajan's global recognition and experience
Rajan served as the RBI Governor from 2013 to 2016 and is globally recognized for his work on financial stability and monetary policy.
He was also the chief economist and director of research at the International Monetary Fund (IMF).
His appointment comes as the US central bank reassesses its monetary policy framework after expanding its nearly $9 trillion balance sheet during the pandemic, then trying to shrink it while bringing inflation back toward its long-term target.
Additional appointments
Other Indian-origin experts in the team
Chetty, a Harvard economist, will co-lead the data task force with McMillon and University of Chicago economist Kevin Murphy. They will focus on improving real-world economic signals that inform Fed's policy decisions.
Sharma, Microsoft's EVP and CEO of Xbox, will be part of the Productivity and Jobs task force with venture capitalist Marc Andreessen and Stanford economist Charles I. Jones.
This panel will assess how emerging technologies like AI affect productivity, employment growth.