Any reason why the Fed doesn't keep interest rates high at all times?

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If rates are raised to dampen inflation and reduce spending, let's say in buying houses, why then would they ever lower rates? Wouldn't it make more sense to keep rates high? The home ownership rate in the U.S. from 1990 until now has steadily held between 63% and 69% (roughly). Is there some other big reason to lower rates at some point? Thank you.


When the Fed raises interest rates, it raises the cost of borrowing by firms which raises their cost of doing business. That induces firms to hire less, delay or eliminate capacity expansions, etc. This is why it is not a good idea for interest rates to be kept high at all times. High interest rates, on the other hand, do benefit savers, often the elderly. 

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Last updated on June 20, 2022