Paul Volcker, who as Federal Reserve chairman in the early 1980s elevated interest rates to historic highs and triggered a recession as the price of quashing double-digit inflation, has died, according to his office.
He was 92.
Volcker took charge of the Fed in August 1979, when the U.S. economy was in the grip of runaway inflation. Consumer prices skyrocketed 13% in 1979 and then by the same pace again in 1980.
Working relentlessly to bring prices under control, Volcker raised the Fed’s benchmark interest rate from 11% to a record 20% by late 1980 to try to slow the economy’s growth and thereby shrink inflation.
Those high interest rates made it so expensive for people and companies to borrow that the economy weakened steadily. By January 1980, a recession had begun. It lasted six months. A deeper and more painful downturn took hold in July 1981. It endured for 18 months and sent unemployment up to 10.8% in November and December 1982, the highest level since the Great Depression.
In a statement Monday, former President Jimmy Carter, who had chosen Volcker to be Fed chairman, called him a “giant of public service.”