Daijiworld Media Network – Washington
Washington, Jul 16: Former Reserve Bank of India (RBI) Governor Raghuram Rajan has been appointed by the US Federal Reserve to a task force reviewing its balance sheet policy as part of a major reform initiative aimed at strengthening monetary policymaking after years of high inflation.
Rajan is among three Indian-origin experts named to the Federal Reserve's review panels. The others include Delhi-born American economist Raj Chetty and senior Microsoft executive Asha Sharma.
The appointments were announced by newly appointed US Federal Reserve Chair Kevin Warsh as part of five task forces created to examine key areas of the central bank's functioning. The panels also include prominent figures such as former Bank of England Governor Mervyn King, former Walmart CEO Doug McMillon, Nobel laureate Thomas Sargent and Silicon Valley investor 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," Warsh said, adding that the aim was to ensure the Fed remains prepared to meet its objectives during a challenging economic period.
According to reports, Rajan will serve on the balance sheet policy task force along with Harvard economist Karen Dynan and former Federal Reserve Governor Jeremy Stein.
The panel will examine the costs, benefits and broader implications of the Federal Reserve's current balance sheet framework, including its asset holdings and their role in implementing monetary policy.
Warsh said the task forces were created to bring greater transparency and fresh perspectives to the central bank's decision-making process.
The five review groups will focus on:
• Federal Reserve communications
• Balance sheet policy
• Economic data usage
• Productivity and jobs
• 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 said.
Rajan, who served as RBI Governor from 2013 to 2016, is widely recognised for his work in financial stability and monetary policy. Before heading India's central bank, he served as Chief Economist and Director of Research at the International Monetary Fund (IMF).
His appointment comes as the US Federal Reserve reviews its post-pandemic monetary policy approach, including the expansion of its balance sheet to nearly $9 trillion and subsequent efforts to reduce asset holdings while controlling inflation.
Chetty, Sharma take key roles
Raj Chetty, a Harvard University economist known for his research on economic mobility, inequality and labour markets, will co-lead the data task force along with Doug McMillon and University of Chicago economist Kevin Murphy.
The panel will explore ways to improve the quality and speed of economic data used by the Federal Reserve for policy decisions.
Asha Sharma, executive vice-president at Microsoft and CEO of Xbox, will serve on the Productivity and Jobs task force alongside Marc Andreessen and Stanford economist Charles I. Jones.
The group will study the impact of emerging technologies, including artificial intelligence, on productivity, employment and long-term economic growth.