The US Federal Reserve has enlisted former Reserve Bank of India (RBI) Governor Raghuram Rajan, Delhi-born American economist Raj Chetty, and senior Microsoft executive Asha Sharma to take part in a major institutional review designed to reshape monetary policymaking following several years of persistently high inflation.
Their appointments form part of five expert task forces unveiled by newly appointed US Federal Reserve Chairman Kevin Warsh. The broader initiative also features 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.
Warsh did not provide detailed comments on Rajan's individual responsibilities but said the exercise is intended to bring new perspectives into the Federal Reserve after inflation remained above the central bank's target for more than five years.
According to a PTI report, Rajan will be a member of the balance sheet policy task force alongside Harvard economist Karen Dynan and former Federal Reserve Governor Jeremy Stein. The panel has been tasked with evaluating the costs, benefits, and institutional consequences of the Federal Reserve's existing balance sheet framework, including its asset holdings and the role they play in executing 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 newly formed groups would review five central areas of the Federal Reserve's operations: 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 led the Reserve Bank of India between 2013 and 2016 and is widely recognised for his contributions to financial stability and monetary policy. Before taking charge of India's central bank, he served as chief economist and director of research at the International Monetary Fund and has continued to be a prominent voice on global macroeconomic issues.
His appointment to the Federal Reserve's balance sheet review comes as the US central bank re-evaluates its monetary policy framework in the aftermath of the pandemic-era expansion of its balance sheet to nearly $9 trillion and its subsequent efforts to reduce those holdings while steering inflation back toward its long-term target.
Raj Chetty, a Harvard University economist, will jointly head the data task force with Doug McMillon and University of Chicago economist Kevin Murphy. Their panel will work on strengthening the quality and timeliness of real-world economic indicators used to guide the Federal Reserve's policy decisions.
Chetty is widely known for pioneering the use of large administrative and real-time datasets to examine economic mobility, inequality, and labour market trends across the United States.
Asha Sharma, who was born in Wisconsin and serves as executive vice president of Microsoft and CEO of Xbox, has been named to the Productivity and Jobs task force alongside Marc Andreessen and Stanford economist Charles I. Jones.
That group will study how emerging general-purpose technologies, including artificial intelligence, influence productivity, employment, and broader economic growth.
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