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Daniel Lacalle argues that raising interest rates in response to wartime conditions is ineffective. He states that monetary tightening does not resolve short-term supply shocks caused by conflict.
According to Lacalle, increasing rates would only worsen the burden on small businesses and families by making borrowing more difficult, while not alleviating price increases linked to the war.
Lacalle has previously noted limited consumer impact from tariff-driven inflation, citing that most costs are absorbed by foreign producers in a recent report. He has also observed that U.S. bond yields have declined over the past year, which challenges the prevailing tariff-inflation narrative as detailed in a separate analysis. These observations frame his latest comments on monetary policy during periods of external shocks.