The risk of fixing rates too high does not exist when central banks impose reference rates, as they will always make it easier for state borrowing-artificial currency creation-in the most convenient-what they call "No distortions"-and cheap way.
Many analysts say that central banks do not impose interest rates; they only reflect what the market demands.
Central banks do not buy back state assets, print money, or impose negative real interest rates because they are evil alchemists.
The ECB has announced a possible interest rate cut in June that is in danger of being premature and wrong.
The ECB rate hikes are signaled by many market participants as the cause of the euro zone's stagnation, but curiously, no one mentions that the euro area was already experiencing massive stagnation due to negative interest rates.
Central banks know that inflation is a monetary phenomenon, which is why they attack rising consumer prices with rate hikes and money supply reductions.
The problem of lowering interest rates now, when there is no evidence of having controlled inflation and achieved a target that already erodes the purchasing power of the currency by 2% annually, is to fall into the narrative that the eurozone is in a poor economic situation because of monetary policy when it is due to the wrong fiscal policy, the disaster of the Next Generation EU Funds, whose failure is already only comparable to the forgotten Juncker Plan, a shortsighted and destructive energy, agricultural, and industrial policy, and a taxation system that shifts innovation and technology to other countries.
https://mises.org/mises-wire/central-banks-are-wrong-about-rate-cuts
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