Word: volckerism
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That wry description of the policy of the Federal Reserve Board's new chairman is already making the rounds in Washington. Though he has headed the U.S.'s central bank for a little more than seven weeks, tall, taciturn Paul A. Volcker has lost no time in establishing himself as a staunch inflation fighter, dollar defender and hard-liner on interest rates. Since he took charge on Aug. 6, the key rates used to manipulate credit policy have shot up dramatically. The Fed last week raised the discount rate, which is the interest it charges on money that...
...inflation as enemy number one. Says Bob Giaimo, chairman of the House Budget Committee: "Some Democrats are talking about incentives and stimulants. I don't think they're reading the tea leaves right." Carter may also find the Federal Reserve balkier than before. Its new chairman, Paul Volcker, is a more determined inflation fighter than his predecessor, William Miller, who is now Treasury Secretary...
...Volcker has already permitted the prime interest rate to reach a historic high - 12¾%, and he has assured Congress that he plans to keep up the pressure...
...believe that Washington is finally getting fiscal religion and that the political mood is shifting toward stimulating investment rather than consumption. Some steps in that direction were the Revenue Act of 1978, which slashed maximum capital gains taxes from 49% to 28%, and the appointment of the tough-minded Volcker to the Fed. Though a tight money policy temporarily holds back stock prices, it stands to retard inflation in the longer...
...some investors remain worried about the long-term direction of the U.S. economy, the market decline early last week was considered to be a short-lived emotional response to higher interest rates. These both slow the economy and make bonds relatively more attractive than stocks. Federal Reserve Chairman Paul Volcker repeated that he is committed to throttling back the growth of money supply, and that interest rates would therefore remain high as long as the rate of inflation did. Indeed, the banks' prime rate for business loans climbed from 12¼% to a banana republic...