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.

The Consumer Price Index in Iceland increased 0.20 percent in August of 2025 over the previous month. This dataset provides - Iceland Inflation Rate MoM - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Inflation Rate in the United States increased to 2.90 percent in August from 2.70 percent in July of 2025. This dataset provides - United States Inflation 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.

Core consumer prices in Chile increased 3.42 percent in August of 2025 over the same month in the previous year. This dataset provides - Chile Core Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

In 2023, the usual median hourly rate of a worker's wage in the United States was 19.24 U.S. dollars, a decrease from the previous year. Dollar value is based on 2023 U.S. dollars. In 1979, the median hourly earnings in the U.S. was 17.48 dollars.

Colombia Inflation Rate: Cali data was reported at 0.320 % in Dec 2018. This records an increase from the previous number of -0.060 % for Nov 2018. Colombia Inflation Rate: Cali data is updated monthly, averaging 0.870 % from Jan 1979 (Median) to Dec 2018, with 480 observations. The data reached an all-time high of 4.340 % in Mar 1979 and a record low of -0.700 % in Oct 2013. Colombia Inflation Rate: Cali data remains active status in CEIC and is reported by National Administrative Department of Statistics. The data is categorized under Global Database’s Colombia – Table CO.I002: Consumer Price Index: Inflation Rate.

Colombia Inflation Rate: Pasto data was reported at 0.360 % in Dec 2018. This records an increase from the previous number of 0.220 % for Nov 2018. Colombia Inflation Rate: Pasto data is updated monthly, averaging 0.790 % from Jan 1979 (Median) to Dec 2018, with 480 observations. The data reached an all-time high of 6.550 % in Sep 1990 and a record low of -1.700 % in Dec 1982. Colombia Inflation Rate: Pasto data remains active status in CEIC and is reported by National Administrative Department of Statistics. The data is categorized under Global Database’s Colombia – Table CO.I002: Consumer Price Index: Inflation Rate.

The consumer price index of all-items in British Columbia was ***** points in 2024. Between 1979 and 2024, the consumer price index rose by ***** points, though the increase followed an uneven trajectory rather than a consistent upward trend.

Michigan 5 Year Inflation Expectations in the United States increased to 3.90 percent in September from 3.50 percent in August of 2025. This dataset includes a chart with historical data for the United States Michigan 5-Year Inflation Expectations.

Inflation Rate in Turkey decreased to 32.95 percent in August from 33.52 percent in July of 2025. This dataset provides the latest reported value for - Turkey Inflation Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

Colombia Inflation Rate: Manizales data was reported at 0.270 % in Dec 2018. This records an increase from the previous number of 0.100 % for Nov 2018. Colombia Inflation Rate: Manizales data is updated monthly, averaging 0.790 % from Jan 1979 (Median) to Dec 2018, with 480 observations. The data reached an all-time high of 5.940 % in May 1985 and a record low of -0.820 % in Aug 1983. Colombia Inflation Rate: Manizales data remains active status in CEIC and is reported by National Administrative Department of Statistics. The data is categorized under Global Database’s Colombia – Table CO.I002: Consumer Price Index: Inflation Rate.

Colombia Inflation Rate: Medellin data was reported at 0.430 % in Dec 2018. This records an increase from the previous number of 0.190 % for Nov 2018. Colombia Inflation Rate: Medellin data is updated monthly, averaging 0.925 % from Jan 1979 (Median) to Dec 2018, with 480 observations. The data reached an all-time high of 4.940 % in Nov 1981 and a record low of -1.470 % in May 1986. Colombia Inflation Rate: Medellin data remains active status in CEIC and is reported by National Administrative Department of Statistics. The data is categorized under Global Database’s Colombia – Table CO.I002: Consumer Price Index: Inflation Rate.

The consumer price index of all-items in Saskatchewan stood at ***** points in 2024. In a steady upward trend, the consumer price index rose by ***** points from 1979.

In 2023, the usual median hourly rate of a male worker's wage in the U.S. was ***** U.S. dollars. Dollar value is based on 2023 U.S. dollars. This is a decrease from the previous year, when men's median hourly wage was ***** 2023 U.S. dollars. The median hourly earnings of men in the U.S. not adjusted for inflation can be found here.

The consumer price index of all-items in Alberta stood at ***** points in 2024. Between 1979 and 2024, the consumer price index rose by ***** points, though the increase followed an uneven trajectory rather than a consistent upward trend.

Hong Kong HK: Inflation:(GDP) Gross Domestic ProductDeflator data was reported at 2.931 % in 2017. This records an increase from the previous number of 1.658 % for 2016. Hong Kong HK: Inflation:(GDP) Gross Domestic ProductDeflator data is updated yearly, averaging 4.299 % from Dec 1962 (Median) to 2017, with 56 observations. The data reached an all-time high of 17.760 % in 1979 and a record low of -6.008 % in 2003. Hong Kong HK: Inflation:(GDP) Gross Domestic ProductDeflator data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s Hong Kong SAR – Table HK.World Bank.WDI: Inflation. Inflation as measured by the annual growth rate of the GDP implicit deflator shows the rate of price change in the economy as a whole. The GDP implicit deflator is the ratio of GDP in current local currency to GDP in constant local currency.; ; World Bank national accounts data, and OECD National Accounts data files.; Median;

The consumer price index of all-items in New Brunswick was *** points in 2024. In a steady upward trend, the consumer price index rose by ***** points from 1979.

Inflation Rate in Hong Kong increased to 1.10 percent in August from 1 percent in July of 2025. This dataset provides the latest reported value for - Hong Kong Inflation Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

This paper derives optimal monetary policy rules in setups where certainty equivalence does not hold because either central bank preferences are not quadratic, and/or the aggregate supply relation is nonlinear. Analytical results show that these features lead to sign and size asymmetries, and nonlinearities in the policy rule. Reduced-form estimates indicate that US monetary policy can be characterized by a nonlinear policy rule after 1983, but not before 1979. This finding is consistent with the view that the Fed's inflation preferences during the Volcker-Greenspan regime differ considerably from the ones during the Burns-Miller regime. The file MONTHLY.TXT contains monthly data between 1970.1 and 2000.12 arranged in five columns; the file QUARTERLY.TXT contains quarterly data between 1960.1 and 2000.4 arranged in five columns. The headings OBS, FFRATE, INF, IPI, and UNRATE denote, respectively, the date, Federal Funds rate, CPI inflation rate, Index of Industrial Production, and Unemployment Rate. Additional details can be found the section entitled 3.1 DATA of the paper.