October 6, 1979

Carl Walsh

FRBSF Economic Letter, 2004, issue dec3

Abstract: Twenty-five years ago, on October 6, 1979, the Federal Reserve adopted new policy procedures that led to skyrocketing interest rates and two back-to-back recessions but that also broke the back of inflation and ushered in the environment of low inflation and general economic stability the United States has enjoyed for nearly two decades. The dramatic policy actions by the Federal Reserve in 1979 represented an important break with the past, both in the way monetary policy was conducted and in the importance placed on controlling inflation. This Economic Letter discusses the context within which the October 6 decisions were taken, the immediate consequences of those decisions, and the lessons today's central bankers have learned from them.

Keywords: Inflation (Finance); Money supply; Monetary policy (search for similar items in EconPapers)
Date: 2004
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