Former Reserve Bank of India governor Raghuram Rajan has joined a senior panel created by the US Federal Reserve to examine its balance sheet operations. The appointment places him among specialists advising on possible changes to the central bank’s monetary policy approach.
Rajan serves on the Balance Sheet Policy Task Force, one of five groups formed under new Fed Chair Kevin Warsh. The groups will study communications, data usage, productivity and employment, the inflation target, and balance sheet management. The review follows the Fed’s large-scale asset purchases during the pandemic that expanded its holdings to nearly nine trillion dollars, followed by efforts to reduce the portfolio while returning inflation to the two percent goal.
Rajan will work with Harvard economist Karen Dynan and former Fed governor Jeremy Stein. The panel will assess the costs, benefits, and institutional effects of the Fed’s asset holdings and their role in policy implementation. Warsh said the groups aim to improve decision-making and address the period of elevated inflation.
Rajan previously led the RBI from 2013 to 2016 and served as chief economist at the IMF. Two other Indian-origin experts are also participating in separate task forces, including Harvard economist Raj Chetty, who is co-leading the review of economic data practices.
