Base interest not enough for Sweden

The Swedish central bank, the Riksbank, lowered its base interest rate by 0.25 points to 1.25 percent on Thursday. A wise decision, but the bank still has plenty more to do, the liberal daily Göteborgs-Posten notes: "Critics of the Riksbank often call for it to base its interest policy on the target inflation and forget the rest of the economy. But this is a dumb argumentation. Then you may as well just get rid of the central bank's management and put a computer in charge that automatically adjusts the interest rate according to inflationary pressure. Even if the inflation target is of key importance the central bank must also keep an eye on the economy and cannot use up all its ammunition in one go. Lowering the interest rate was the right thing to do and a very welcome measure, but it won't work any miracles. More important than the decision of the Riksbank is the government's upcoming budget plan which fortunately this time is more aggressive in its goals."

» full article (external link, Swedish)
More from the press review on the subject » Fiscal Policy, » Economic Policy, » Sweden

» To the complete press review of Friday, September 7, 2012