I just read on Swedish Statistical Page SCB that the Swedish consumer prices only were 1,9% on a full year basis. This is very interesting since stabilizing the rate of inflation will cause the Swedish currency to be fairly non-volatile as well as well as keeping interest rates (and the cost of capital) low. On the other hand, it could be seen as a double edged sword since low inflation could turn into deflation and Sweden would turn into Japan. I dont think that this actually could happen, but.. you never know. It would be nice if the Swedish society could ride out the storm and increase savings and see a gradual adjustment of the balance sheets and keep the cost of interest down. Read the report from SCB here, from what I have read on Swedish newspapers the information is more or less only paraphrased from this material. It is also fair to say that SCB does not spend their money in the Excel graph department...
2009/04/14
Extra, extra, read all about it!
I just read on Swedish Statistical Page SCB that the Swedish consumer prices only were 1,9% on a full year basis. This is very interesting since stabilizing the rate of inflation will cause the Swedish currency to be fairly non-volatile as well as well as keeping interest rates (and the cost of capital) low. On the other hand, it could be seen as a double edged sword since low inflation could turn into deflation and Sweden would turn into Japan. I dont think that this actually could happen, but.. you never know. It would be nice if the Swedish society could ride out the storm and increase savings and see a gradual adjustment of the balance sheets and keep the cost of interest down. Read the report from SCB here, from what I have read on Swedish newspapers the information is more or less only paraphrased from this material. It is also fair to say that SCB does not spend their money in the Excel graph department...
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It appears that you're actually claiming low interest rates will enable a "saving your way out of falling GDP".
If you're seeing low interest rates leading to an increase in savings instead of increased consumption, it must mean that the confidence and expectations of consumers are even worse than those of both price setters (those behind the KPI and those behind the i-rate).
I concur with what you are saying, most definitely. I was only hoping that this was not going to be the case. If the Swedish pop. could save a little more than they are doing now, and still maintain consumption... AND manage to keep inflation low (by altering consumption patters) I was hoping that the Swedish GDP could be maintained. Of course, I admit this is a dream scenario and in terms of "economic theory" you are of course correct.
Thanks for a great comment!
// Carl
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