Paul Volcker, the former Federal Reserve chairman who in the early 1980s raised interest rates to historic highs and triggered a recession as the price of quashing double-digit inflation, has died. He was 92, per the AP. The New York Times and Washington Post report his death was confirmed by his daughter, Janice Zima, who tells the Post his death was due to complications from prostate cancer. Volcker took charge of the Fed in August 1979, when the US economy was slipping into the grip of runaway inflation, the AP notes. Consumer prices skyrocketed 13% in 1979, and then by the same amount in 1980. The 6-foot-7-inch Volcker, who the Times notes had a "reputation for austere integrity," worked relentlessly to bring prices under control. He pushed the Fed’s benchmark interest rate from 11% to a record 20% by late 1980 to try to slow the economy’s growth and shrink inflation.
Those high interest rates made it so expensive for people and companies to borrow that the economy weakened steadily. By January 1980, a recession had begun, which lasted six months. A deeper downturn took hold in July 1981, enduring for 18 months and sending unemployment up to 10.8%, the highest since the Great Depression. In the midst of it, Volcker was vilified by the public. But the pain eventually paid off, and inflation receded. Once it did, Volcker’s Fed began lowering interest rates, and the economy bounded back. After the 2008 financial crisis, President Obama recruited Volcker as an adviser. Volcker pressed for regulations on banks that became known as the Volcker Rule, and were included in a far-reaching financial overhaul bill Congress passed in 2010. (Read more Paul Volcker stories.)