Interest rate volatility in 1980
Interest rates displayed extreme volatility in 1980, reaching record highs in early spring, then plummeting until midsummer, only to rise above their previous peaks by late fall. Interest rates were more variable not only in a cyclical sense, but also in their weekly and daily behavior. It is unlikely that any single factor was responsible for the volatile behavior of interest rates in the past year, as rates are subject to myriad influences. These include changing inflationary expectations, exogenous commodity-specific supply shocks, fiscal and monetary policy actions, and national and international political developments.