Volcker Era: U.S. Inflation Focus

Many countries, including the U.S., were still unconvinced about the merits of the U.K.’s approach, but once Paul Volcker, a strong proponent of using monetary policy to control inflation, took over the mantle of leadership at the Federal Reserve, it was only a matter of time before the focus of policymakers shifted from economic growth and full employment to inflation control. The Federal Funds rate reached an unprecedented level of 19% in June 1981, which incidentally reined in inflation from its peak of 15% the previous year. Since then, monetary policy has come full circle, with inflation targeting now the widely accepted norm.