Jul 252014

The second experiment has just concluded in Sweden, also with calamitous results. There, the central bank did the exact opposite. It had previously raised interest rates to rein in a domestic housing bubble. In doing so, it generated deflation and raised unemployment. It recently corrected that policy error by cutting the interest rate back to 0.25 per cent.

Wolfgang Münchau

What central banks should do to deal with bubbles – FT.com.

 Posted by at 8:44