US Ropes In Ex-RBI Governor Raghuram Rajan, 2 Other Indians For Key Fed Roles

The US Federal Reserve has roped in former Reserve Bank of India (RBI) governor Raghuram Rajan, along with two other Indian-origin experts -- Delhi-born American economist Raj Chetty and senior Microsoft executive Asha Sharma -- to review its balance sheet as part of a sweeping reform program aimed at reshaping monetary policymaking after years of elevated inflation.

The appointments are part of the five task forces announced by the newly appointed US Federal Reserve chairman Kevin Warsh, which also include former Bank of England Governor Mervyn King, former Walmart CEO Doug McMillon, Nobel laureate Thomas Sargent, and Silicon Valley venture capitalist Marc Andreessen.

"I am honoured that the best minds from a range of disciplines have agreed to work with us to sharpen our performance as an institution. The goal is straightforward: to ensure the Fed is best positioned to achieve our objectives in this consequential time," Warsh said on Thursday.

What Will Raghuram Rajan Do For US

The Fed Chair did not elaborate specifically on Rajan's role but said the task force is intended to inject fresh thinking into the Federal Reserve after more than five years of inflation running above the central bank's target. 

But, according to a PTI report, Rajan will serve on the balance sheet policy task force alongside Harvard economist Karen Dynan and former Federal Reserve Governor Jeremy Stein. The panel will examine 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. 

"I reached out to 15 people who I have known and trusted with a diversity of views. It's a move towards transparency and new ideas," Warsh said. 

He said the groups would examine five core areas of the Fed's work: communications, balance sheet policy, the use of economic data, productivity and jobs, and the inflation framework.

"Our purpose here is to make better decisions in the conduct of monetary policy and put these years of high inflation behind us," Warsh told senators.

Rajan, who served as Governor of the Reserve Bank of India from 2013 to 2016, is internationally recognised for his work on financial stability and monetary policy. Before leading India's central bank, he was chief economist and director of research at the International Monetary Fund and has remained an influential voice on global macroeconomic issues.

His inclusion in the Federal Reserve's balance sheet review comes as the US central bank reassesses its monetary policy framework after the pandemic-era expansion of its nearly $9 trillion balance sheet and the subsequent effort to reduce it while bringing inflation back towards its long-term target.

Other Indian Panelists

Chetty, a Harvard University economist, will co-lead the data task force with McMillon and the University of Chicago economist, Kevin Murphy. The group will focus on improving the quality and timeliness of real-world economic signals that inform the Federal Reserve's policy decisions.  

Chetty is known for pioneering the use of large administrative and real-time datasets to study economic mobility, inequality, and labour markets in the United States.

Wisconsin-born Sharma, the executive vice president of Microsoft and CEO of Xbox, will serve on the Productivity and Jobs task force alongside venture capitalist Andreessen and Stanford economist Charles I. Jones.

The panel will assess the economic impact of emerging general-purpose technologies, including artificial intelligence, on productivity, employment, and economic growth.  

(With inputs from PTI and IANS)