J. Roger Guffey was pursuing a career as a partner in a law firm when the Federal Reserve Bank of Kansas City came calling in the late 1960s and put him on a path that would later lead to the Bank’s presidency, which he held from 1976 to 1991.
Guffey was born in 1929 in Kingston, Missouri. He earned a degree in business administration from the University of Missouri – Columbia in 1952 and, after three years in the US Army working with intelligence forces in Germany, he returned to MU to earn a law degree.
Guffey was a partner in the Kansas City law firm Fallon, Guffey and Jenkins, a firm he had spent a decade building, when then-President George Clay invited him to the Kansas City Fed for lunch and convinced the attorney that a few years at the Federal Reserve would benefit his law practice by improving his understanding of banking issues.
Guffey joined the Bank as general counsel in 1968. He became senior vice president of the Administrative Services Division in 1973 and became president in March 1976. A child of the Great Depression, Guffey was at the helm of the Kansas City Fed and a member of the Federal Open Market Committee during a period sometimes referred to as the Great Inflation. In that position, he was a participant at the meeting that is seen as a key moment in Federal Reserve history—the turning point in the FOMC’s battle against inflation.
With double-digit inflation and public expectation that inflation would continue to escalate, the FOMC, under the leadership of Chairman Paul Volcker, needed to take dramatic action. At a rare Saturday meeting on October 6, 1979, the FOMC decided to shift the conduct of its open market operations to a focus on controlling the money supply by reducing bank reserves instead of its traditional targeting of the federal funds rate. It was a move designed to kill inflation, and while it was successful, it was not painless. The resulting jump in interest rates, with the prime rate hitting a record-setting 21.5 percent in December 1980 and remaining above 17 percent for much of 1981, touched off a recession in the months that followed.
“I think back on that event as a tough decision,” Guffey said in 1991. “There were divergent views as to whether the draconian steps that we would eventually take were necessary and whether the price that thereafter was paid by the nation was worth the effort. I happened to think it was and I look back upon that with some warmth and the sense that it was a tough decision and it turned out to be the right one. I think it really demonstrates the positive impact the Federal Reserve can have on the nation.”
The decision, Guffey said, showed the importance of an independent central bank. “There is no way that you could have approved what we did on Oct. 6, 1979 through our Congress…,” he said. “It’s very difficult for elected officials to make those kind of hard decisions. That’s the reason I think our form of a central bank is very important and worth preserving. It’s worked and it will continue to work.”
During Guffey’s tenure he founded the Kansas City Fed’s annual economic policy symposium, which has become a widely respected event for central bankers, economists and academics. He retired in September 1991.
Guffey died at age seventy-nine in 2009. The theater in the Reserve Bank’s headquarters is named in his honor.
BibliographyTodd, Tim. Confidence Restored: The History of the Tenth District’s Federal Reserve Bank, 2008.
Written by the Federal Reserve Bank of Kansas City. See disclaimer.