Market Overview

This Day In Market History: Paul Volcker Takes Over As Fed Chair

Share:
This Day In Market History: Paul Volcker Takes Over As Fed Chair

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened?

On this day 40 years ago, Paul Volcker took over as chairman of the Federal Reserve.

Where The Market Was

The Dow Jones Industrial Average closed at 848.55 and the S&P 500 traded at 104.30. Today, the Dow is trading at 25,717 and the S&P 500 is trading at 2,844.

What Else Was Going On In The World?

In 1979, cable sports network ESPN launched. A mob of protectors destroyed the U.S. embassy in Islamabad, Pakistan. The U.S. inflation rate was 11.2%.

The Volcker Era Begins

After serving as president of the New York Federal Reserve for four years, Volcker took over as Fed Chair during an extremely difficult period of double-digit inflation.

Volcker is credited with implementing policies that brought inflation under control in the early 1980s. Under Volcker’s leadership, the Fed aggressively raised the federal funds interest rate to as high as 20% in June 1981. Volcker took a lot of heat from the business world due to the negative impact sky-high interest rates had on economic growth.

The Fed began easing its monetary policy starting in 1982.

Volcker is also credited with a key provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act implemented following the financial crisis of 2007-2010. The so-called “Volcker Rule” restricts commercial banks from making certain types of speculative investments that do not directly benefit their customers.

Volcker was replaced as Fed chair by Alan Greenspan in 1987. The inflation rate at the time was 4.4%.

Related Links:

This Day In Market History: Dow Gains 9.5% On Great Depression Optimism

How Important Is The Yield Curve?

Photo credit: HarvardEthics, Flickr

Posted-In: Paul Volcker this day in market history Volcker RuleEducation Top Stories Federal Reserve Markets General Best of Benzinga

 

Related Articles (DIA + SPY)

View Comments and Join the Discussion!
Lightning Fast
Market News Service
$199 Free 14 Day Trial
Book A Demo
Learn How You Can Succeed In The Market With Benzinga Pro

Fastest Market News

Real-Time News Alerts

Customizable News Filters

Book A Demo

A Peek Into The Markets: US Stock Futures Signal Higher Start On Wall Street

Scoop: Arcadia Biosciences Announces Joint Venture For Hemp Project In Hawaii