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October 6, 1979

Author

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  • Carl E. Walsh

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.

Suggested Citation

  • Carl E. Walsh, 2004. "October 6, 1979," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue dec3.
    • Handle: RePEc:fip:fedfel:y:2004:i:dec3:n:2004-35
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