Posted 4/11/2024, 10:00:29 AM
As Inflation Soars, Fed Faces Pressure to Avoid 1970s-Style Crisis
- Inflation is accelerating, with "supercore" services inflation running at 5% year-over-year and 8% over the past 3 months
- Fed aims to avoid repeating 1970s double inflation episode that rocked economy for a decade
- Early in his tenure, even Volcker underestimated inflation, having to raise rates to 20% three times
- By 1983 Volcker had cooled inflation to 2.5% and was prepared to keep rates high as inflation declined
- History rhymes - with inflation accelerating, Fed must avoid mistakes of 1970s and early Volcker years