<i>&gt;  increasing the interest rate tends to decrease the inflation rate.</i><p>But the problem is exactly that this correlation doesn&#x27;t seem to apply <i>in the opposite direction</i> today: decreasing interest rates are not generating inflation across the board, quite the opposite. You can debate why that is the case, but that&#x27;s what we see: central banks keep cutting rates expecting economic activity to get hot and generate inflation, but this is not happening. The Japanese experience would seem to indicate this is &quot;the new normal&quot;, where monetary policy is simply a brake and not an engine; which means we have to find alternative engines.