Fed’s inflation fighter Paul Volcker dies
“Giant in monetary policy” saw nation through economic retreats, rebounds
Former Federal Reserve Chairman Paul Volcker, known for taking dramatic steps to rein in America’s runaway inflation in the 1980s and pushing Wall Street reforms in the aftermath of the financial crisis, has died at 92.
President Jimmy Carter tapped the 6-foot-7 Volcker to be the Fed’s chairman in 1979 when the U.S. economy was facing runaway inflation. Volcker, who headed the central bank until 1987, pushed interest rates to historic highs to tame inflation and bring down consumer prices, triggering a recession.
The decision, which was unpopular at the time, helped curb inflation, and the economy eventually rebounded.
“Paul was as stubborn as he was tall, and although some of his policies as Fed chairman were politically costly, they were the right thing to do,” Carter said Monday. “His strong and intelligent guidance helped to curb petroleum-driven inflation, easing a strain on all Americans’ budgets.”
The Volcker-led victory over inflation is credited with beginning what economists call the “Great Moderation’’ – more than two decades of mostly steady economic growth, relatively low unemployment and modest price increases. The Great Moderation ended with the Great Recession of 2007-09.
“Paul Volcker was a giant – literally and figuratively – in monetary policy,” said Greg McBride, chief financial analyst at Bankrate. “We enjoy low inflation and have enjoyed more than three decades of falling interest rates because he had the backbone to aggressively raise interest rates to break inflation.”
In the decades after his time as Fed chairman, President Barack Obama chose him as an economic adviser when he took office after the financial crisis of 2008. He pressed for lawmakers to impose new restrictions on big banks, a regulation known as the “Volcker Rule” that was included in a financial overhaul bill passed in 2010.
Fed Chairman Jerome Powell on Monday said that Volcker’s contributions to the country left a “lasting legacy.”
“His life exemplified the highest ideals – integrity, courage and a commitment to do what was best for all Americans,” Powell said.