Tough action on interest rates in the US. But how rattled is the US Federal Reserve?

Analysis: Wall Street braces for rises in borrowing costs in July and September as 8.6% inflation spurs on central bank

The ghost of Paul Volcker is haunting Washington today after the US Federal Reserve announced it was stepping up the fight against inflation with an aggressive 0.75 percentage point increase in interest rates.

Four decades ago - the last time the annual increase in the American cost of living was higher than its current 8.6% - Volcker became legendary as the central banker who was prepared to drive the world's biggest economy into deep recession to squeeze inflation out of the system.