The Federal Reserve is essentially sitting on its hands, former World Bank President David Malpass told Newsmax Saturday.
Malpass told "America Right Now" that the Fed's decision on Wednesday to drop its primary interest rate a quarter point was simply too little and too late.
"The Fed's moving too slowly," he said.
Malpass blamed part of the problem on the Fed holding on to outdated methodology.
"There's a lot of inertia at the Fed. They use models that are basically 50 years old. So think of how much the rest of the world has changed, but not the Fed models in economics."
Malpass, who led the World Bank from 2019-2023, said the Fed is "just behind the curve."
"I wrote that in a Wall Street Journal article in June. They should have cut in June," he said.
President Donald Trump repeatedly criticized the Fed for keeping its primary interest rate intact at a higher level than he felt it should be and called on Fed Chair Jerome Powell to resign, referring to him as Jerome "Too Late" Powell.
Malpass said politics aside, Trump is right.
"So if you think about it now, they're talking about three cuts. Now that means for six months out of this year — out of calendar year 2025 — they're substantially too high on the interest rate. And that has an effect on everybody across the country, small businesses, mortgages, everything is too high because the Fed's moving too slowly."
He added that the Fed has a balance sheet running near $9 trillion, saying it is out of control and restructuring is needed.
"That's not helping people around the country," he said. "They borrow from banks and dump it into government bonds. That's not a good strategy."
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Jim Mishler ✉
Jim Mishler, a seasoned reporter, anchor and news director, has decades of experience covering crime, politics and environmental issues.