A fine balance

Uncomfortably high inflation is keeping policymakers from cutting overnight interest rates. Thursday’s inaction in Frankfurt and London – policy rates were maintained at 4,25% and 5% respectively – is likely to be followed by a September 16 do-nothing in Washington, where the US Federal Reserve’s rate is already at a more accommodating 2%. Unchanged rates won’t make life any easier for bank managers whose unwillingness to lend to each other has left spreads on interbank loans unusually high. Wha...