Ex-RBI Governor Raghuram Rajan, 2 Other Indian-Origin Experts Join Key US Fed Panels

The US Federal Reserve has appointed former Reserve Bank of India (RBI) governor Raghuram Rajan to one of its newly constituted task forces as part of a broad reform initiative aimed at reviewing its monetary policymaking framework after years of elevated inflation.

Rajan will be joined by two other Indian-origin experts, Delhi-born American economist Raj Chetty and senior Microsoft executive Asha Sharma, on separate panels announced by newly appointed Federal Reserve Chair Kevin Warsh.

The appointments are part of five task forces set up by Warsh to examine key areas of the central bank’s functioning. The panels also include former Bank of England Governor Mervyn King, former Walmart CEO Doug McMillon, Nobel laureate Thomas Sargent, and 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.

Raghuram Rajan To Review Fed’s Balance Sheet

While Warsh did not spell out Rajan’s specific responsibilities, he said the task forces were created to bring fresh perspectives to the Federal Reserve after inflation remained above its target for more than five years.

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 assess the costs, benefits and institutional implications of the Federal Reserve’s balance sheet framework, including its asset holdings and the role they play in implementing monetary policy.

“I reached out to 15 people whom I have known and trusted with a diversity of views. It’s a move towards transparency and new ideas,” Warsh said.

He added that the five task forces would review the Federal Reserve’s work on communications, balance sheet policy, 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 served as RBI governor from 2013 to 2016. Before leading India’s central bank, he was the chief economist and director of research at the International Monetary Fund (IMF) and has remained a prominent voice on global monetary policy and financial stability.

His appointment comes as the Federal Reserve reviews its monetary policy framework following the pandemic-era expansion of its nearly $9 trillion balance sheet and its subsequent efforts to shrink it while bringing inflation back towards its long-term target.

Raj Chetty, Asha Sharma Also Named To Task Forces

Harvard economist Raj Chetty will co-lead the data task force with Doug McMillon and University of Chicago economist Kevin Murphy. The panel will focus on improving the quality and timeliness of economic data used in the Federal Reserve’s policymaking.

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

Meanwhile, Asha Sharma, executive vice president at Microsoft and CEO of Xbox, has been appointed to the Productivity and Jobs task force alongside Marc Andreessen and Stanford economist Charles I. Jones.

The group will evaluate the impact of emerging technologies, including artificial intelligence, on productivity, employment and economic growth.