Rajan Urges Fed to Raise Rates Now to Fight Inflation

Former RBI Governor Raghuram Rajan has urged the US Federal Reserve to take a more hawkish stance on inflation, arguing that financial conditions remain too loose and the economy is showing little sign of being constrained.

Rajan said the Fed should already have raised interest rates, and that he would take a more hawkish approach as US inflation remains elevated. He pointed to strong data-centre investment, persistent fiscal deficits, and continued consumer spending as signs that US financial conditions are not sufficiently restrictive.

Rajan backed Fed Chair Kevin Warsh's anti-inflation instincts, saying investors will look to his Jackson Hole speech for a clear plan on bringing inflation down.