Archive · 28 Aug 2026
Raghuram Rajan Urges Fed Rate Hike as Inflation Persists
Raghuram Rajan said the US central bank may need to raise interest rates.
He thinks inflation is still too high.
He said strong business investment, government spending and consumer purchases are keeping the economy active.
Investors are watching to see when the Federal Reserve will raise rates.
Some expect a move by December, while others see a possible move as early as September.
Federal Reserve Chair Kevin Warsh will speak at a meeting in Jackson Hole on Friday.
Rajan said Warsh seems serious about lowering inflation but needs to explain his plan clearly.
Rajan also said India’s rupee currently looks fairly stable.
Raghuram Rajan said the Federal Reserve should raise interest rates because inflation remains elevated.
Rajan argued that strong data-center investment, a large fiscal deficit and resilient consumer spending are supporting the US economy.
Investors expect borrowing costs to rise by December, while bond yields reflect possible expectations of a September move.
Federal Reserve Chair Kevin Warsh is expected to discuss inflation, rates and global markets at Jackson Hole on Friday.
Rajan said the Indian rupee appeared resilient and was not significantly misaligned or in a panic situation.
- Who
- Raghuram Rajan, Federal Reserve Chair Kevin Warsh, investors and Indian monetary officials.
- What
- Rajan said the Federal Reserve should raise interest rates because inflation remains elevated and financial conditions are not restrictive enough.
- When
- Rajan’s comments came as markets assessed the timing of the Federal Reserve’s next rate moves; Warsh is scheduled to speak on Friday.
- Where
- The discussion concerns the United States, while Rajan also commented on India’s rupee; Warsh will speak at the Jackson Hole conference.
- Why
- Rajan said strong investment, a large fiscal deficit and resilient consumer spending are supporting economic activity and keeping inflation pressures elevated.
- Rajan’s recommendation
- He said the Federal Reserve should raise rates while inflation remains elevated.
- Investor expectations
- Markets expect borrowing costs to rise by December, with some expectations of a move as early as September.
- Warsh’s speech
- Federal Reserve Chair Kevin Warsh is scheduled to speak at the Jackson Hole conference on Friday.
- Economic supports
- Rajan cited very strong data-center investment, a large fiscal deficit and resilient consumer spending.
- Rupee level
- The rupee was trading around 95.50 per US dollar, compared with nearly 97 in May.
- Foreign-currency inflows
- RBI Governor Sanjay Malhotra said the measures were expected to attract at least $80 billion in foreign-currency inflows.