Rajan Urges Fed to Hike Rates to Combat Accelerating Inflation

Raghuram Rajan, former RBI governor and current member of a US Federal Reserve task force, is urging the Fed to raise interest rates to combat accelerating inflation. Speaking at the annual conference of central bankers in Jackson Hole, Wyoming, Rajan stated that he would be more hawkish than the current Fed stance.

Rajan pointed out that American consumers are running down savings and continuing to spend, contributing to an economy not being held back by restrictive financial conditions. He also mentioned a 'very strong' investment in data centers as a growth driver, but noted that the US has a significant fiscal deficit that doesn't appear to be decreasing anytime soon.

Rajan expressed support for Federal Reserve Chairman Jerome Warsh's intentions to combat inflation, stating that Warsh 'has the right instincts' and wants to bring down inflation. However, he emphasized the need for clear communication of a plan to achieve this goal.