How central banks have lost control of the world
From engaging in ‘competitive easing’ to provoking international currency wars, have we finally reached the limit of what monetary policy can achieve?
By Mehreen Khan
TelegraphUK
17 Feb 2015
The world’s oldest central bank has ventured into uncharted territory.
Last week, Sweden’s Riksbank slashed its main policy rate into negative territory.
In doing so, it became the 14th central bank to ease monetary policy so far this year, but the first to actually take its “repo rate” below zero to -0.1pc. This means Sweden is actually charging its banks to lend money. In Britain, the same interest rate currently stands at a historic low of 0.5pc, but could well be cut further if Mark Carney is to be believed.
Switzerland and Denmark have already sent their deposit rates to -0.75pc to prevent currency appreciation and defeat deflation.
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