Central bankers pay tribute to Paul Volcker

US Fed chairman who tackled 1970s-era inflation has died aged 92

Central bankers from around the world paid tribute on Monday to Paul Volcker, the Federal Reserve chairman who tackled the US inflationary upsurge in the 1970s and early 1980s.

Volcker died on Sunday at the age of 92, according to the Volcker Alliance, a good government advocacy group founded by the former central banker.

A committed public servant, Volcker had earned a reputation for probity and dogged policymaking even in the face of political storms.

Jay Powell, the current Fed chairman, said in a statement that he was deeply saddened by Volcker’s death. “He believed there was no higher calling than public service. His life exemplified the highest ideals — integrity, courage, and a commitment to do what was best for all Americans.”

After his time at the Fed, Volcker focused on reining in excessive risk-taking on Wall Street, successfully pushing to limit bank’s trading activities — a rule that was named after him.

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“He’s always been concerned with financial stability, he thought it was a top priority,” Janet Yellen, who served as Fed chair from 2014 until 2018, told the Financial Times. “Whenever I spoke out about it, including in recent years, I always would get encouraging and thankful notes from him.”

His career reflected a conviction that “overly easy money coupled with bad incentives could create enormous problems”, said Raghuram Rajan, former governor of the Reserve Bank of India. “I think he was broadly someone who focused on sensible money — on preserving the value of money — whether through inflation control or keeping credit from getting haywire.”

Mark Carney, governor of the Bank of England, praised him as a “towering figure among the central bankers of his generation”, adding in a statement: “The integrity and independence he showed in his battle against inflation helped lead the United States — and with it, the world — through some of the most testing times of the modern era.”

John Williams, president of the New York Fed, said Paul Volcker was “truly a hero of the Fed’s history”.

“He is a towering role model for central bankers the world over,” Mr Williams added in a statement.

From bringing down inflation five decades ago to helping provide stability to the financial system in 2008, he acted with humility in the service of the publicJames Gorman, Morgan Stanley chief executive

Volcker was appointed Fed chairman by President Jimmy Carter in 1979 with a mission to end the Great Inflation that was taking price growth towards double-digit levels and pressuring the dollar on foreign exchange markets.

“I think it required tough and decisive action that imposed a good deal of pain in the economy in the short run, but had a substantial pay-off,” Ms Yellen said of his steps to tame inflation.

Volcker’s later work included investigating the UN’s Oil-for-Food programme and service on Mr Obama’s Economic Recovery Advisory Board in the aftermath of the financial crisis, which paved the way for the adoption by Congress of the so-called Volcker rule.

“He was a genuine statesman — a man of personal courage and rectitude,” said American economist Ted Truman, who served under Mr Volcker in the 1980s as the Fed’s director of the division of international finance. “He had strong principles — low inflation, fiscal discipline, sound banking, and respect for public service.”

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Mr Obama credited Volcker with making the US financial “stronger and safer.”

“I’ll remember Paul for his consummate wisdom, untethered honesty, and a level of dignity that matched his towering stature,” the former Democratic president said on Monday. “I’m proud to have called him not just an adviser, but a friend.”

James Gorman, chief executive of Morgan Stanley, described Volcker as “arguably the most important financial figure in the last half century. From bringing down inflation five decades ago to helping provide stability to the financial system in 2008, he acted with humility in the service of the public.” Jamie Dimon, chairman and chief executive of JPMorgan, said he “always had a great deal of respect for Paul Volcker, even when we disagreed.”

Thomas Ross, president of the Volcker Alliance, called the organisation’s founder “a giant among American public servants”, adding: “He believed in the importance of an effective government to our democracy. He cared deeply about the future of America and those who serve in our government.”

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Additional reporting by Laura Noonan in New York