James Downie is a writer and editor for MSNBC Daily. He was an editor and columnist for The Washington Post and has also written for The New Republic and Foreign Policy.
On Wednesday, the Federal Reserve announced it is leaving interest rates unchanged at around 5.3%, their highest level since 2001. Federal Reserve Chair Jerome Powell suggested that one or two rate cuts could come before the end of the year — but almost certainly not until fall. Wednesday’s decision to maintain current rates, though, was a mistake: The Fed should be cutting rates already. And every month it refuses to do so is a gift to Donald Trump.
In the push and pull between fighting inflation and avoiding recession, other central bankers are beginning to lean toward the latter. The notoriously inflation-averse European Central Bank, as well as central banks in Canada, Switzerland and other countries, have cut rates. Yet the Fed is persisting. The problem is that, by design, higher interest rates are not victimless. The very point is to put a brake on economic growth by making consumers reduce spending.
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