Raghuram Rajan picked for US Fed review panel: Here's the role he'll play

Former Reserve Bank of India (RBI) Governor Raghuram Rajan, Delhi-born American economist Raj Chetty, and senior Microsoft executive Asha Sharma have been appointed to task forces set up by the US Federal Reserve to review how the central bank conducts monetary policy.

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

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Fed Sets Up Five Review Panels

Announcing the initiative, Warsh said the review aims to assess whether the Federal Reserve's policy tools and decision-making processes remain fit for a changing economy.

"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," he said.

Warsh added that the US economy has changed significantly over the past generation and that each task force would examine whether policymakers' "means, methods, analytical tools and policy approaches" can be improved.

According to the Federal Reserve, the groups will operate independently with support from Fed staff and will provide evidence-based recommendations to the Federal Open Market Committee (FOMC).

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Rajan To Review Balance Sheet Policy

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 balance sheet regime, including its asset holdings and their role in implementing monetary policy.

Chetty To Lead Data Task Force

Chetty, a Harvard University economist, will co-lead the Data task force with Doug McMillon and University of Chicago economist Kevin Murphy.

The group will focus on improving the quality and timeliness of real-world economic data used in 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.

Asha Sharma To Focus On AI And Jobs

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 panel will assess how emerging general-purpose technologies, including artificial intelligence, affect productivity, employment and economic growth.

Other Panels To Review Inflation And Communications

The Communications task force, led by Peter Fisher, Arminio Fraga, and Mervyn King, will review how the Federal Reserve communicates policy decisions during periods of uncertainty.

Meanwhile, the Inflation Frameworks task force, led by Harvard economist Greg Mankiw, Thomas Sargent and former Bank for International Settlements adviser William White, will revisit how the central bank understands and responds to inflation.