The Volcker Shock was a period of historically high interest rates precipitated by Federal Reserve Chairperson Paul Volcker's decision to raise the central bank's key interest rate, the Fed funds effective rate, during the first three years of his term. Volcker was appointed chairperson of the Fed in August 1979 by President Jimmy Carter, as replacement for William Miller, who Carter had made his treasury secretary. Volcker was one of the most hawkish (supportive of tighter monetary policy to stem inflation) members of the Federal Reserve's committee, and quickly set about changing the course of monetary policy in the U.S. in order to quell inflation. The Volcker Shock is remembered for bringing an end to over a decade of high inflation in the United States, prompting a deep recession and high unemployment, and for spurring on debt defaults among developing countries in Latin America who had borrowed in U.S. dollars.

Monetary tightening and the recessions of the early '80s

Beginning in October 1979, Volcker's Fed tightened monetary policy by raising interest rates. This decision had the effect of depressing demand and slowing down the U.S. economy, as credit became more expensive for households and businesses. The Fed funds rate, the key overnight rate at which banks lend their excess reserves to each other, rose as high as 17.6 percent in early 1980. The rate was allowed to fall back below 10 percent following this first peak, however, due to worries that inflation was not falling fast enough, a second cycle of monetary tightening was embarked upon starting in August of 1980. The rate would reach its all-time peak in June of 1981, at 19.1 percent. The second recession sparked by these hikes was far deeper than the 1980 recession, with unemployment peaking at 10.8 percent in December 1980, the highest level since The Great Depression. This recession would drive inflation to a low point during Volcker's terms of 2.5 percent in August 1983.

The legacy of the Volcker Shock

By the end of Volcker's terms as Fed Chair, inflation was at a manageable rate of around four percent, while unemployment had fallen under six percent, as the economy grew and business confidence returned. While supporters of Volcker's actions point to these numbers as proof of the efficacy of his actions, critics have claimed that there were less harmful ways that inflation could have been brought under control. The recessions of the early 1980s are cited as accelerating deindustrialization in the U.S., as manufacturing jobs lost in 'rust belt' states such as Michigan, Ohio, and Pennsylvania never returned during the years of recovery. The Volcker Shock was also a driving factor behind the Latin American debt crises of the 1980s, as governments in the region defaulted on debts which they had incurred in U.S. dollars. Debates about the validity of using interest rate hikes to get inflation under control have recently re-emerged due to the inflationary pressures facing the U.S. following the Coronavirus pandemic and the Federal Reserve's subsequent decision to embark on a course of monetary tightening.

Graph and download economic data for 10-Year Real Interest Rate (REAINTRATREARAT10Y) from Jan 1982 to Oct 2025 about 10-year, interest rate, interest, real, rate, and USA.

Official interest, rates short - term deposits unsecured and call money

1957 - 2001, January 1957- December 2003 Changed on January 13 2004. Frequency: Discontinued.

ABSTRACT Beyond representing coordination or government failures, the Brazilian financial crisis in the 1980s characterized the dominance of financial interests on public policies. This paper shows that such dominance began with the external debt negotiations in 1982, which put international creditors’ interest first. It argues that the imposed external adjustment - specially the exchange rates devaluation, public investment cuts and the hike in real interest rates - generated recession and financial instability (notoriously inflation), which would threat depreciating private wealth. Therefore, both the external adjustment and the private wealth protection only turned possible due to the increasing public deficits and debts - including by transferences of debt from private to public sector. The dominant perspective, found in the literature on the period, blaming government deficits and debts for the financial instability of the 1980s is wrong. Economists, even heterodox ones, still believe that Brazil’s financial crisis in the 1980s resulted from budget deficits and public debts. This paper shows, contrary to the dominant view, that once the public sector had to allow private wealth adjustment to the external conditions imposed by foreign creditors, public deficits were the only possible outcome in that conditions.

Key information about South Africa Short Term Interest Rate

• South Africa Short Term Interest Rate: Month End: Treasury Bills Rate: 91 Days was reported at 6.66 % pa in Nov 2025, compared with 6.84 % pa in the previous month.
• South Africa Short Term Interest Rate data is updated monthly, available from Dec 1980 to Nov 2025.
• The data reached an all-time high of 11.00 % pa in Feb 2012 and a record low of 3.00 % pa in Oct 2025.
• Short Term Interest Rate is reported by reported by South African Reserve Bank.

• In the latest reports, South Africa Government Bond Yield: Month End: 10 Years and Over was reported at 8.98 % pa in Nov 2025.
• The cash rate (Policy Rate: Month End: Repo Rate) was set at 6.75 % pa in Nov 2025.
• South Africa Exchange Rate against USD averaged 17.27 (USD/ZAR) in Oct 2025.

Inflation is generally defined as the continued increase in the average prices of goods and services in a given region. Following the extremely high global inflation experienced in the 1980s and 1990s, global inflation has been relatively stable since the turn of the millennium, usually hovering between three and five percent per year. There was a sharp increase in 2008 due to the global financial crisis now known as the Great Recession, but inflation was fairly stable throughout the 2010s, before the current inflation crisis began in 2021. Recent years Despite the economic impact of the coronavirus pandemic, the global inflation rate fell to 3.26 percent in the pandemic's first year, before rising to 4.66 percent in 2021. This increase came as the impact of supply chain delays began to take more of an effect on consumer prices, before the Russia-Ukraine war exacerbated this further. A series of compounding issues such as rising energy and food prices, fiscal instability in the wake of the pandemic, and consumer insecurity have created a new global recession, and global inflation in 2024 is estimated to have reached 5.76 percent. This is the highest annual increase in inflation since 1996. Venezuela Venezuela is the country with the highest individual inflation rate in the world, forecast at around 200 percent in 2022. While this is figure is over 100 times larger than the global average in most years, it actually marks a decrease in Venezuela's inflation rate, which had peaked at over 65,000 percent in 2018. Between 2016 and 2021, Venezuela experienced hyperinflation due to the government's excessive spending and printing of money in an attempt to curve its already-high inflation rate, and the wave of migrants that left the country resulted in one of the largest refugee crises in recent years. In addition to its economic problems, political instability and foreign sanctions pose further long-term problems for Venezuela. While hyperinflation may be coming to an end, it remains to be seen how much of an impact this will have on the economy, how living standards will change, and how many refugees may return in the coming years.

The benchmark interest rate in New Zealand was last recorded at 2.25 percent. This dataset provides - New Zealand Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Graph and download economic data for Inflation, consumer prices for the United States (FPCPITOTLZGUSA) from 1960 to 2024 about consumer, CPI, inflation, price index, indexes, price, and USA.