Leaders Less Interest – that Sweden has never had before. – UNT

Leaders Less Interest – that Sweden has never had before. – UNT

Riksbank decision means that the usual banks will pay 0.1 percent to place their money in the Riksbank. The aim is to boost inflation that has long hovered around 0 percent. The target is 2 percent inflation in 2016.

Is less interest right recipe? Many prominent economists were very surprised by the Riksbank’s decision. All the more so as Riksbank Governor Stefan Ingves previously criticized because he did not want to cut rates because many felt that he absolutely should have done it. Now he thus longer than most.

Now What? Will we have a little money in the bank having to pay extra for it? No, not yet, answers the big banks. That is to say right now there will be no extra charges, but if Stefan Ingves goes further and introduces a larger less interest you never know how it goes. Banks may in any case pay to the Riksbank less the interest rate and somehow they want to compensate themselves by allowing their customers to pay. We’ll see.

Was it here is a necessary decision? Hard to say, a few countries have already introduced less interest, Denmark and Switzerland. And one of the Danish banks have thought impose a fee for savers. Has it worked as expected? There is as yet unknown.

The main reason for different gambit of inflation next year’s negotiations. When no one knows how much inflation it is complicated to negotiate future wages. A functioning wage negotiations are crucial to economic development and on the widely accepted target of 2 percent inflation in 2016 will be reached. Get economists now believe that this goal will be achieved even after several years.

Less interest rate combined with support purchases of government bonds for 10 billion. But the package does not seem very impressive. Can it get any noticeable effects on inflation of 0.1 per cent less interest compared to 0 percent interest we have today? Will 10 billion in government bonds, resulting in rising prices in the whole country? It seems very doubtful.

Stefan Ingves now promises more action on those he now presented their intended effect. Can we expect a high level of less interest with effects also on small savers accounts? Will there be massive purchases of government bonds? Perhaps the effect is rather even higher housing prices and stock prices with increased risk of backlash.

Is it really sense of the Riksbank to invest in an action that no one knows if it works? An inflation rate of 0 percent or less common in Europe today. If a large proportion of our major trading partners have unusually low inflation or even falling prices, it is difficult to imagine that Sweden, which is so extremely dependent on foreign trade, would escape such a development.

Maybe the Governor have pondered another lap. And what do the politicians?