British statistician George Box argued in the late 1970s that all models are wrong, but some are useful, to express the concept that mathematical models are, by definition, simplified approximations of reality and therefore incorrect, but that they can sometimes be useful to illustrate and explain specific situations. It should be added that their usefulness depends on the context: the art lies in using each model only when the context for which it was designed is fulfilled. The economic cycle that is now closing with the interest rate cuts has been a perfect example of how models are useful only if they are applied well, since none of the many doom-laden prophecies based on these models have come true. Compressed into just four years, since the start of the pandemic, this cycle has been a crash course in economics, finance and economic policy. The number of novel elements and economic policy responses concentrated in this period is unparalleled in recent history. Not even during the great financial crises, which ultimately almost always replicate the same pattern of leverage, paradigm shift, drastic reduction of balance sheets, increased risk aversion, endless debate on the convenience and need for bailouts, and slow recovery. The context had never occurred before: an overlapping series of supply and demand shocks with exponential dynamics, where events of a nature and magnitude never seen before occurred at full speed, multiplying the difficulty of diagnosis. This dynamic has called into question many models and generated many questions: Why have inflation expectations been so stable in the face of rapid increases in food and energy prices? Is there or is there not a relationship between unemployment and inflation? How do wages, margins and prices interact? What is the impact of subsidies and aid on private sector incentives? How do the increase in public debt and the reductions in central bank balance sheets affect interest rates? Should fiscal policy contribute to the stabilization of inflation by limiting price increases in the face of large-scale shocks? All this without including the effects of industrial policy and the panoply of tariffs, sanctions and restrictions that constitute the new economic policy today. The succession of exponential shocks makes it difficult to evaluate the period and gives rise to many confusions. For example, the fact that central banks raised interest rates at full speed does not necessarily imply that they did so late; it may only imply that the accelerated dynamics of price shocks required an equally accelerated response. The test of success is in the result, not in the means used to achieve it. And the result is the following: the best labour market in recent decades, inflation already very close to the target without having needed a recession to achieve it, inflation expectations better anchored to the target than before the pandemic, and public debt just a few points above the 2019 level. You be the judge. The complexity of the cycle requires a detailed analysis to avoid drawing the wrong conclusions. For example, when inflation began to accelerate in 2021, there were many academic economists who considered the analysis of the components of inflation irrelevant, arguing that it all came down to a simple relationship between unemployment, inflation and expectations (the so-called Phillips Curve). Little by little they realized that their simplistic analysis was of no use and ended up delving into the evolution of the prices of cars, raw materials, housing, services, etc. The memory of the 1970s led to immediate emphasis on a possible price-wage spiral, without considering the possibility of a price-margin spiral facilitated by the rapid increase in the volatility of all prices. Similarly, the rapid increase in job vacancies, rather than the relative stability of unemployment, was pointed to as a way of defining inflationary tensions in the labour market, without stopping to consider that perhaps companies, frightened by the difficulty of finding workers during the reopening, were exaggerating vacancies and thus the overheating of the labour market, as suggested by the relative stability of real wages. Warnings were also raised about the creation of numerous zombie companies if fiscal aid was put in place to cope with the impact of the pandemic lockdown, and about the rapid increase in equilibrium unemployment that ERTEs would generate by limiting the reallocation of resources – without considering that the pandemic lockdown did not change the structure of the economy, and companies only needed liquidity to survive until reopening. What conclusions can be drawn after four years? The most important: the adjustment of interest rates, combined with a smart fiscal policy, has allowed price shocks to be absorbed and inflation to fall as quickly as it rose without necessitating the recession that many predicted, and without permanently affecting the dynamics of inflation. What is more, and perhaps counterintuitively, the price shock, undoubtedly painful for everyone, has served to restore price stability (defined as inflation of 2% in the medium term). Because let us not forget: in the pre-pandemic decade, in the US and, above all, in the eurozone, inflation expectations were below 2% and monetary policy was unable to raise them. A revealing detail: in the eurozone, the rapid increase in prices in 2021-22 served to make the market, despite considering the shock transitory – that is, it did not reflect a permanent increase in inflation above 2% – stop discounting zero interest rates for the following decade. Which should perhaps not come as a surprise, since cumulative core inflation in the eurozone was, at the start of the pandemic, almost 20% below the consistent level, with an average of 2% since the start of the euro in 1998. De facto, markets validated the strategy of offsetting periods of low inflation with periods of high inflation to anchor inflation expectations to the target. Let us not forget this context when deciding which models to use to calibrate rate cuts: let us remember the symmetry of the inflation target, preserve the improvement in employment and avoid another decade of excessively low inflation. @angelubide