With the faded prospects for a strong recovery, the dilemma of the interest rates grows increasingly intractable. With high rates, the economy cannot grow. So why doesn't the Federal Reserve Board lower them?

Unfortunately, the Federal Reserve is now walking an exceedingly narrow path. Much of the current political discussion leaves the listener, not accidentally, under the impression that the Federal Reserve can put the rates wherever it wants--if it really wants to. But the reality is that the Fed has very little discretion to move one way or the other as long as federal deficits are high and rising. Any forceful attempt to lower interest rates, particularly in the months before an election, is very likely to have precisely the opposite effect. By inciting fears that it had caved in to political pressures at the cost of still greater future inflation, it would shortly find rates going not down but up. That's why the Federal Reserve has no choice but to move quietly and extremely cautiously this summer--despite the condition of the economy.

The Treasury Department understands that necessity perfectly well. But the Treasury also understands that the Reagan economic strategy is working badly, and it has begun to needle the Fed again. The secretary of the Treasury, Donald T. Regan, recently advanced the needling campaign a little further by speculating publicly on the desirability of an independent Federal Reserve. He rec remainsalled the time, almost half a century ago, when the secretary of the Treasury sat, ex officio, on the Federal Reserve Board.

The Federal Reserve Board does not remain an independent agency by accident. Its duties do not always make it popular, and every secretary of the Treasury has seen plenty of reasons to put a little space between it and people who run for reelection. The last person in Washington who would really want to see the incumbent secretary of the Treasury on the board, voting publicly on monetary policy, is President Reagan--and the next-to-last is Donald T. Regan himself. Mr. Regan is not making a serious proposal to change the board's status. He is merely trying to disassociate the administration from the consequences of its own errors.

Until budget deficits beginto decline, the Federal Reserve will have very little latitude in making policy. By raising the question of the Fed's independence, the administration has only added to the anxieties of borrowers and lenders--and greater anxieties mean still higher interest rates.