Sweden’s deflated economy: Sub-zero conditions

Posted: July 11, 2014 in economy
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Don’t leave us this way

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Sweden’s deflated economy

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Interest rates are back to crisis lows

ONLY a few years ago the Sveriges Riksbank was the envy of the central-banking world. Sweden’s economy, which it oversees, grew three times faster than the euro zone’s in 2010 and dodged Europe’s double-dip recession in 2012-13. Even better, the Riksbank felt confident enough in recovery to start raising interest rates in 2010. Its main policy rate reached 2% in July 2011, while rates in most other rich economies stayed near zero.
Yet the Riksbank seems to have got out too far over its cross-country skis. By the end of 2011 inflation was sinking rapidly while the crisis in the euro zone deepened. Since late 2012 inflation has bumped along at roughly zero and occasionally dipped into negative territory (see chart). And on July 2nd the Riksbank announced a further half-point cut to its benchmark rate, larger than expected. This pared the rate all the way back to 0.25%, its lowest point in the worst days of the global …

via Economic Crisis http://ift.tt/1oopEHV

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