Former Federal Reserve Chairman Paul A. Volcker today called inflation “a perpetual concern” and praised recent actions by the nation’s central bank to nudge up interest rates to combat rising prices.
Volcker, speaking with reporters at the White House, voiced particular praise for the policies of the current Fed chairman, Alan Greenspan.
“The inflation rate has been going up some, and I think we ought to deal with it,” Volcker said.
As Fed chairman, Volcker earned a reputation as the government’s chief inflation fighter in the early 1980s when he pursued a policy of tight credit that drove up interest rates in a successful effort to break the back of inflation that was spiraling in the double digits.
Consumer Inflation 6.1%
For the first two months of 1989, inflation at the consumer price level has been rising at an annual rate of 6.1%. At the wholesale level, prices have been rising at a 12.6% annual rate.
Volcker, who stepped down from the Fed in 1987 when his term as chairman expired, said: “The economy is been doing pretty well, it keeps growing. What more can I say?”
Asked directly about inflation, Volcker said: “When you talk to me, I think inflation is a perpetual concern. So I’m delighted to see the concern about inflation openly expressed. I’m delighted to see what Mr. Greenspan has been saying about it.”
Greenspan has argued that higher interest rates are needed in the short run to keep a lid on inflation--a position that has put him at odds with President Bush, who has said he does not share quite the degree of concern over current inflation that Greenspan does.
“I think Mr. Greenspan is well able to take care of himself in making those judgments” on interest rates, Volcker said.
He also expressed support of current steps taken by “the Federal Reserve, generally.”
Volcker was at the White House to discuss with Bush the final report of the National Commission on Public Service, which has recommended pay increases of approximately 50% over two years for top federal officials. Volcker is chairman of the commission.