Thursday, April 21, 2016

The Race Past the Bottom

April 21, 2016
UPDATE 1-Swedish central bank extends money printing, keeps rates below zero

While the economy has surged - growth was 4.1 percent in 2015 - the Riksbank has found itself in a race to the bottom on interest rates with its regional peers, notably the European Central Bank, which is expected to hold policy unchanged at a rate meeting later on Thursday.

When your benchmark rate is -0.50%, as is the case in Sweden, you are no longer racing to the logical bottom. You are racing well past it. The only other bottom is the illogical one, and that one can't be hit until negative infinity. Sigh.

2 comments:

mab said...

They're worried about inflation resulting from an appreciating currency. Bizzarro world!

Stagflationary Mark said...

mab,

Well, they've got all the tools they need. There's a screwdriver that acts like a hammer. There's a drill which can turn cheddar cheese into something resembling swiss cheese. And let's not forget the garden hose. Very useful for tying up any loose ends.

Professionals. Tools. Nothing to worry about. ;)