Riksbank was right to use negative rates, say former central bankers
As ECB loosened policy, Swedish central bank lacked any credible alternative, Flug and Honohan conclude
Sveriges Riksbank adopted a sound policy response to the low inflation of 2015–2020, including a negative policy rate and asset purchases, two former central bank governors conclude.
Karnit Flug and Patrick Honohan, the former governors of the central banks of Israel and Ireland, say the Swedish central bank had no choice but to adopt ultra-loose policy strategies during those years. This was mainly due to the more dovish approach adopted by the European Central Bank (ECB) at the time.
“Moneta
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