Rajan Urges Fed to Raise Rates to Tackle Persistent Inflation

Former Reserve Bank of India Governor Raghuram Rajan has urged the US Federal Reserve to adopt a more aggressive interest-rate approach to tackle persistent inflation.

Rajan, speaking at the Jackson Hole gathering of central bankers, said policymakers should raise rates to prevent elevated inflation from becoming entrenched.

He argued that monetary policy is not sufficiently restrictive given the strength of the US economy, which he attributed to factors such as substantial investment in data centres, a large fiscal deficit, and continued consumer spending.

Rajan also pointed out that Americans are drawing down savings while maintaining consumption, indicating resilient demand rather than significant constraint by current monetary conditions.