- Former RBI governor Raghuram Rajan joins the Federal Reserve's balance sheet policy task force.
- Economist Raj Chetty will help review the economic data used in US monetary policymaking.
- Microsoft executive Asha Sharma joins the panel studying AI, productivity and jobs.
- Fed Chair Kevin Warsh created five independent taskforces to evaluate monetary policy tools.
- Former Bank of England governor Mervyn King and Nobel laureate Thomas Sargent are also members.
A FORMER governor of the Reserve Bank of India and a senior Microsoft executive have been named as part of a US Federal Reserve taskforce to review the manner in which it conducts monetary policy.
Raghuram Rajan, who famously predicted the 2008 global financial crisis, Delhi-born American economist Raj Chetty and Microsoft’s Asha Sharma are on five panels announced last week by the newly appointed US Federal Reserve chairman, Kevin Warsh.
Supported by Federal Reserve staff, they will operate independently, provide feedback, and produce findings for the Federal Open Market Committee, the Federal Reserve said in a statement.
Former Bank of England governor Mervyn King, former Walmart CEO Doug McMillon, Nobel Prize winner Thomas Sargent and Silicon Valley venture capitalist Marc Andreessen are also on the taskforces.
Raj Chetty rajchetty.com
“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 in a statement last Thursday (9).
He said the US economy has changed significantly over the last generation, and each task force will carefully consider whether policymakers’ means, methods, analytical tools and policy approaches can be improved.
The five task forces will be co-led by external advisers – accomplished economists, business leaders, and former central bank practitioners.
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 current balance sheet regime, including its asset holdings and their role in implementing monetary policy.
During his time as RBO governor, Rajan was widely credited with bringing inflation down in India, stabilising the rupee and creating a stable environment for growth.
He returned to a life of academia in Chicago, when he completed his three-year-term as governor in 2016.
Chetty, a Harvard University economist, co-led the data task force with McMillon and the University of Chicago economist, Kevin Murphy.
The group will focus on improving the quality and timeliness of real-world economic signals that inform 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 SharmaMicrosoft
Wisconsin-born Sharma, the executive vice president of Microsoft and CEO of XBox, will serve on the productivity and jobs task force, alongside venture capitalist Andreessen and Stanford economist Charles I Jones.
The panel will assess the economic impact of emerging general-purpose technologies, including artificial intelligence, on productivity, employment and economic growth.
The communications task force, led by Peter Fisher, Arminio Fraga and former Bank of England governor Mervyn King, will review how the Federal Reserve communicates its policy deliberations and decisions during periods of uncertainty.
The inflation frameworks task force, led by Harvard economist Greg Mankiw, Nobel prize winner Thomas Sargent and former Bank for International Settlements adviser William White, will revisit how the central bank understands and responds to the drivers of inflation.
