Swedish central bank cuts key rate further below zero

[Raystonn]

http://news.yahoo.com/swedish-central-bank-cuts-key-rate-further-below-164625984.html;_ylt=AwrBJSAprQlVM0wAUJDQtDMD

"Sweden's central bank took its key interest rate further into negative territory Wednesday in a surprise move aimed at supporting a return to inflation.

The Riksbank cut its repo rate by 0.15 percentage points to -0.25 percent and said it was buying government bonds worth 30 billion kronor ($3.4 billion, 3.2 billion euros) to prevent an appreciating krona from hindering an uptick in inflation."

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[tabnloz]

Wonder what the odds are of a them dropping their implied peg? The Swiss have, the Danes have cut rates multiple times trying to maintain; doesn't look good for those Nordic countries. How much EU QE can they handle?

[jjacob]

Countries try to print money, cut rates and generally pass the "deflationary parcel" around.
Unfortunately, this is a game which no country can win.

[tabnloz]

Countries try to print money, cut rates and generally pass the "deflationary parcel" around.
Unfortunately, this is a game which no country can win.

Yes, but the Swedish or the Danes (or any of those periphery nations running an implicit peg) cannot expand their balance sheet in the same manner that the EU can, not even close. So, continually trying to devalue their currency by bond buying/further NIRP/other means, puts more and more strain on their economy. Eventually their [imports] get so [expensive] or confidence drains so much that they need to let their currency appreciate or risk a proper bust up.

edit

[Robert Paulson]

Countries try to print money, cut rates and generally pass the "deflationary parcel" around.
Unfortunately, this is a game which no country can win.

Yes, but the Swedish or the Danes (or any of those periphery nations running an implicit peg) cannot expand their balance sheet in the same manner that the EU can, not even close. So, continually trying to devalue their currency by bond buying/further NIRP/other means, puts more and more strain on their economy. Eventually their [imports] get so [expensive] or confidence drains so much that they need to let their currency appreciate or risk a proper bust up.

edit

that's just as true for the EU and the US as it is to the swedes and danes.

all the money printing reallocates resources differently than they would have been allocated in a free market.
this causes the wrong things to be produced in the wrong quantities and the price of the things people actually want goes up.

how long until everything gets so expensive relative to income that the pitchforks start coming out? no one knows for sure.

[EsaEzekiel]

Bitcoin Spacecraft in Swedish 

[tabnloz]

Countries try to print money, cut rates and generally pass the "deflationary parcel" around.
Unfortunately, this is a game which no country can win.

Yes, but the Swedish or the Danes (or any of those periphery nations running an implicit peg) cannot expand their balance sheet in the same manner that the EU can, not even close. So, continually trying to devalue their currency by bond buying/further NIRP/other means, puts more and more strain on their economy. Eventually their [imports] get so [expensive] or confidence drains so much that they need to let their currency appreciate or risk a proper bust up.

edit

that's just as true for the EU and the US as it is to the swedes and danes.

all the money printing reallocates resources differently than they would have been allocated in a free market.
this causes the wrong things to be produced in the wrong quantities and the price of the things people actually want goes up.

how long until everything gets so expensive relative to income that the pitchforks start coming out? no one knows for sure.

The Swedish CB, like the Danish & Swiss central banks doesn't have the capacity to print trillions like the ECB, US, UK.

As the ECB devalues with its 1.1trillion program, the Swedes need to devalue accordingly. Compare say the German economy with Sweden. As has been noted around the place, the UK tried to match Germany a while back and ended up breaking the pound. If the ECB goes into QE2,3 etc, how far negative can they go in response?

[Q7]

So it means here if i leave my money with the bank i will lose 0.25 percent of its value every year. So if the money if left in the house then how safe would that be if case of theft or fire. Pretty much one would have no choice here. Better to get bitcoin then

[tabnloz]

So it means here if i leave my money with the bank i will lose 0.25 percent of its value every year. So if the money if left in the house then how safe would that be if case of theft or fire. Pretty much one would have no choice here. Better to get bitcoin then

I think it is the rate for banks keeping funds with the central bank. That effect still trickles down to customers just not directly to deposits afaik.

Interesting piece of the article:

"Jessica Hinds, an analyst at Capital Economics, said further rate cuts and bigger asset purchases could be expected in response to a rising krona as a result of the European Central Bank's measures to stimulate inflation.

Swedish daily Svenska Dagbladet called the announcement "extraordinary" as rate changes are traditionally made public after the central bank's monetary policy meetings."

So, they'll have to keep cutting as the Euro devalues and probably do so unexpectedly. The Swiss certainly shocked the markets by letting their currency appreciate wildly just a few days after vowing to maintain the peg....