The U.S. Federal Reserve will be forced to return lending rates to zero after erring in boosting borrowing costs amid a probable recession, said James Grant, editor of Grant’s Interest Rate Observer.

“The Fed is going to recant and reverse,” Grant said in a Bloomberg TV Canada interview Thursday with Amanda Lang in Toronto. “There’s an important chance it will return to zero or some policy equivalent to zero, some new outbreak of stimulus.”

The central bank waited too long to raise interest rates, doing so more out of a sense of obligation or “institutional dignity” after months of indecision than as a result of an improving economic backdrop, Grant said, adding it’s probable the U.S. is already mired in a recession. The Fed raised rates last month for the first time in almost a decade, lifting its target to a range of 0.25 percent to 0.5 percent.

“It implies a recession and there’s a fair chance we’re in it,” Grant said in an interview after his TV appearance. “Even as the Fed acted, we could see the conditions under which it tightened were some of the weakest of any Fed action.”

Market investors don’t share Grant’s view on rates. The odds of a rate cut over the next 12 months are zero, according to trading in the overnight swap market, based on Bloomberg calculations.

Severe Slump

U.S. manufacturing, already in a slump, ended 2015 with a thud. Equipment sales of non-military machines excluding planes fell 0.2 percent last month, capping an annualized 5.8 percent drop from October through December that marked the biggest quarterly decrease in two years, the Commerce Department’s durable goods report showed Thursday in Washington.

The central bank’s stimulative policies pushed forward consumer spending on products such as automobiles, creating a consumption deficit with rates now higher, Grant said. As well, the low borrowing rates allowed companies with fundamentally weaker business models to stay afloat for longer.

“We have a new remit for the Fed: ‘First, do no harm,”’ he said. “The Fed has done a lot of harm.”