Rajan should head the Fed, says Barron’s

PTI New Delhi | Updated on January 09, 2018

Former Reserve Bank Governor Raghuram Rajan

Global magazine’s pitch comes as Trump readies to name the central bank’s Chair

Can former RBI governor Raghuram Rajan head the US Federal Reserve? Yes, he would be the ideal choice to lead the American central bank, says global financial magazine Barron’s.

US President Donald Trump is expected to soon announce a successor to Federal Reserve Chair Janet Yellen, whose term expires early next year.

“If sports teams can recruit the best talent from around the globe, why not central banks?” said an article in Barron’s, pitching for Rajan as the next head of the Federal Reserve. The article regrets that “...nowhere on the short list of potential candidates to lead the Federal Reserve is the current star among the world’s central bankers — someone who oversaw a sharp drop in inflation, the stabilisation of a currency, and a 50 per cent jump in stock prices”.

“Perhaps more important, his was a lonely but prescient voice warning of a financial crisis resulting from excessive risk-taking in credit derivatives — years before it hit,” it added.

There are precedents for central banks to be headed by non-citizens, such as Canada-born Mark Carney at the Bank of England, the article said, maintaining that nobody had pitched for Rajan for the Fed post though he has been mentioned as a possible Nobel laureate in economics.

Rajan, who at 40 was the first non-westerner and youngest to become the Chief Economist at the IMF, shot to big fame three years after he predicted a financial crisis at an annual gathering of economists and bankers in the US in 2005. He was appointed RBI Governor by the previous UPA government in 2013 and although he wanted a second term, he was not offered an extension — which most of his predecessors got — by the current NDA regime.

He is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at the Booth School of Business, University of Chicago.

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Published on October 31, 2017
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