The peak U.S. federal funds rate during the inflation fight in 1980 was 20 percent.
The Federal Reserve sharply tightened monetary policy under Chair Paul Volcker to reduce persistent inflation and inflation expectations. The federal funds rate, the overnight interest rate at which banks lend reserve balances, reached about 20 percent in 1980.
Such high short-term rates made borrowing more expensive for households and businesses. The policy helped bring inflation down, but it also contributed to severe economic weakness and a major rise in unemployment during the early 1980s.
The 20 percent figure is often confused with other interest rates, including the prime rate charged by banks to their best customers. The federal funds rate itself is an overnight interbank rate and is not the same as a consumer loan rate.