Business: Volcker's Pinch Begins

Soaring interest buoys the buck but starts a slide in housing

When he boldly 'tackled the twin problems of runaway inflation at home and a hemorrhaging dollar abroad by tightening credit and raising interest rates a month ago, Federal Reserve Chairman Paul Volcker was almost universally hailed. The road down from 13% inflation would be long and difficult, but it was also imperative; and Volcker's policy was acclaimed as necessary. Now the costs of the descent are beginning to become evident.

Since the Federal Reserve action, the prime interest rate paid by top corporations has jumped another 2% beyond its previously record...

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