Raghuram Rajan

Raghuram Rajan is the Katherine Dusak Miller Distinguished Service Professor of Finance at the University of Chicago Booth School of Business and a senior fellow at the Hoover Institution. He previously served as the 23rd governor of the Reserve Bank of India and as the IMF’s chief economist and director of research; his work focuses on banking, corporate finance, monetary policy, and economic development.

Central Banks Cannot Conceal the Fiscal Signal in Rising Yields

Former Reserve Bank of India governor Raghuram Rajan argues that central banks cannot solve a fiscal problem by suppressing the market signals it produces. Rising long-term yields may reflect government deficits and the future cost of accumulated debt, he says, rather than market dysfunction requiring intervention; attempts to push them down risk delaying the fiscal adjustment policymakers must eventually make. Central banks can restore liquidity in a genuine market crisis, Rajan contends, but they cannot make persistent public borrowing sustainable.

Hoover InstitutionSep 9, 20267 min read