exactly because it lowers the hurdle rate.

theres no good argument for "we should have the hurdle rate as high as we possibly can"

and the "dilution" isnt really dilution in the context of economic growth. it simply makes it easier to use the money to create economic activity, the overall context is likely still deflationary.

and if growth slows for a while and its .5% inflation, so what?

the hard cap alternative is a situation where the greater the economic growth, the greater the incentive is to simply hodl the money.

which is a really terrible incentive structure.