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Central Banks Are Wrong About Rate Cuts

Central Banks Are Wrong About Rate Cuts
European Central Bank headquarters building is seen in Frankfurt, Germany, on March 7, 2018. Ralph Orlowski/Reuters
Daniel Lacalle
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Commentary

When we talk about monetary policy, people do not understand the importance of interest rates reflecting the reality of inflation and risk. Interest rates are the price of risk, and manipulating them down leads to bubbles that end in financial crises, while imposing too high rates can penalize the economy.

Daniel Lacalle
Daniel Lacalle
Author
Daniel Lacalle, Ph.D., is chief economist at hedge fund Tressis and author of the bestselling books “Freedom or Equality” (2020), “Escape from the Central Bank Trap” (2017), “The Energy World Is Flat”​ (2015), and “Life in the Financial Markets.”