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Sweden Central Joins The NIRP Club: Lowers Interest Rate To -0.1%, Launches QE
It's a NIRP world and you are either in it, or are determined to lose the currency wars. And hours ago, the world's oldest central bank, that of Sweden, announced that it too would join its NIRP peers in an attempt to preserve its currency's fighting power in the global currency wars which make a mockery of what is going on in Ukraine, by lowering the benchmark interest rate to -0.1%, but also launch QE by buying SEK 10 billion of government bonds, thereby making sure that the stock of available debt in private hands is even lower and that central banks monetize even more than merely "all" of all net issuance in 2015.
From the press release:
There are signs that underlying inflation has bottomed out, but the situation abroad is now more uncertain and this increases the risk that inflation will not rise sufficiently fast. The Executive Board of the Riksbank has therefore decided to cut the repo rate by 0.10 percentage points, to -0.10 per cent, and to adjust the repo-rate path down somewhat. At the same time, the interest rates on the fine-tuning transactions in the Riksbank's operational framework for the implementation of monetary policy are being restored to the repo rate +/- 0.10 percentage point. Moreover, the Riksbank will buy government bonds for the sum of SEK 10 billion. These measures and the readiness to do more at short notice underline that the Riksbank' is safeguarding the role of the inflation target as a nominal anchor for price setting and wage formation.
Economic activity in Sweden strengthening but inflation is too low
Although the recovery abroad is slow, growth in Sweden will benefit from the low oil prices, the weaker krona and the very low repo rate. GDP growth is expected to increase at a faster pace in the coming period and the labour market is expected to strengthen.
Inflation is still low, but there are now signs that underlying inflation, for instance, the CPIF excluding energy, has bottomed out and is rising. The krona is weaker than anticipated, which will also contribute to somewhat higher inflation. However, low energy prices are expected to hold down CPIF inflation in the year immediately ahead.
Readiness to do more
The measures the Riksbank is now taking underline that the Riksbank is safeguarding the role of the inflation target as a nominal anchor for price setting and wage formation. To ensure that inflation rises towards the target, the Riksbank is prepared to quickly make monetary policy more expansionary, even between the ordinary monetary policy meetings, should the need arise. This will primarily entail making further repo-rate cuts, postponing the first repo-rate increase and increasing the purchases of government bonds. In addition, there is the possibility of a programme of loans to companies via the banks.
As the WSJ adds, analysts were divided ahead of the rate decision about which way it would go. A small majority expected unchanged rates while others had forecast the repo rate could be cut as low as minus 0.25%. In response to the move, the Swedish krona weakened against the euro, which rose to around 9.65 kronor from 9.50 kronor.
It's called NIRP for a reason: "Sweden’s two-year bond, which is more responsive to monetary policy changes than longer-dated bonds, traded at a yield of minus 0.23% after the decision compared with minus 0.18% before."
While it is unclear if NIRP is the missing link that will fix all that ails the deflating Swedish economy, one thing is clear: the Riskbank has just given the all clear to BTFATH:
But no matter just how drastic this latest market intervention by yet another central bank, most wanted "moar"
Analysts were initially underwhelmed by the scale of the bond-buying program, known as quantitative easing, but noted the Riksbank’s comment that it is ready to do more in between scheduled meetings.
“Give me 10 billion kronor and I’ll say thank you very much but it’s the smallest quantitative easing ever,” said Société Générale analyst Kit Juckes.
SEB analyst Carl Hammer said he thought 10 billion kronor could be “just the beginning,” noting “they left the door open.”
Analysts at Nordea bank said the overall message from the Riksbank was “extremely soft.”
And sure enough, when this initial attempt to boost stock prices, pardon, inflation is found to be lacking, expect to see much more.
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It's all the rage.
As perverse as 3 parent children...
are any of these CB clowns in the slightest bit concerned that negative interest rates directly destroys Capital.
The kettle's whistling on the stove over here.
"While it is unclear if NIRP is the missing link that will fix all that ails the deflating Swedish economy..."
Yeah right... Take a look at swedish housing prices, and one will know where all the printed money has gone the last 15 years. Only thing is, the swedish central bank do not take consideration to housing prices in their CPI. And so, they claim there is not enough inflation, yet house prices have skyrocketed the last 15 years (as with household debt, obviously...)
Indeed, as I've mentioned several times before. The average mortgage term in Sweden is over 200 years.
QE, it's not just for breakfast anymoar
What planet am I on?
No.
you know 2guys banging one chick isn't really that perverse.
The socialist miracle of Sweden!...lol.
Nmewn
You mean the former socialist miracle Sweden that's become the flophouse of the north for any Tom, Dick and Harry from the southern hemisphere that can find their way in.
Sweden reminds me of those old ladies that one reads about in the news every once in a while that have 500 or so cats living in their house. What started out as kindness of heart by letting in one or two stray kittens has become a complete health hazard to both herself and her community.
@25or... and they breed like rabbits.
Home of the 200 year mortgage term.
Fuck the bankers.
Went into the 7-11 yesterday to buy a soda.....got stuck 30 minutes behind a line of bankers all buying lottery tickets.
I told them gambling was a tax for people that can't do math.....all I got back was a blank stare. So I just bought my soda and got the hell out of there.
I'm already tired of all that farce. Just reminds me of the Einstein words
Two things are infinite: the Universe and human stupidity; and I am not sure about the Universe.
We are in a currency war....
Extra Extra. Read all about it, Qualitative Easing has declared war, this one is of the currency type, read all about it.
Who is winning?
With record low interest rates, borrowers, namely governments seem to be winning on historically cheap debt issuance.
More and more debt means we are accelerating towards the end game of systemic defaults. Yay!
Don't look forward to retirement, by then taxes will be much higher and alot of promises reneged. Something's gotta give when default looms.
One has to wonder what sort of box the rats must be trapped in; they are all trying to use the same (fail) method of escape
progressive monkey see-----progressive monkey do.
Grimaldus
No that trip to Mars was off the charts, once the moon wasn't made of cheese, they had no where else to go. The pressure is intense, but you aint seen nothin yet.
The Riksbank is and has been very worried about the private debt in Sweden wich is the largest in the developed world (yes it's true). Now they apparently want to solve the problem by lowering rates to make people buy even more shit they don't need. I have a loss for words....
The 'Riskonbank'
Swedish stock index OMXS30 (swedens 30 largest companies) now up over 30% since the bottom in october last year. Seems healthy...
/Sarc
Archetype
Indeed and there is a huge housing bubble going on over in Sweden. I guess they feel compelled to build houses for all those millions of gypsies and "asylum seekers" that they've let in in recent years.
here in the ussr I took some cash outta da bank, and the teller wanted to know: What do you need this money for??..I being a reader of ZH, smiled and said for my wife she buys stuff..IRS no I am not structuring please do not confiscate my accounts..some authority hates savers the world over..what would buffet do?
Overmed
"what would buffet do?"
Why use other peoples money of course, courtesy of the taxpayers.
25or, opm is nice but I just think he buys an exemption..as a friend of obuma.
How many are now in the NIRP club? I am losing track.
Well there's Mr Gopher, Foxy, Mr Chayote, Bambie who are regulars, and once and a while Mr Armadillo comes around to place his bet.
.
Dup
Progressive tyranny marches on.......
Grimaldus
Dude...we just patched things up with CNBC and CNN....and you had to go say something like that.
NIRP – Think of it as a fee the banksters charge to guard your money, from the banksters (????).
I think the Mafia calls it a protection fee.
That was your biggest problem from going off the gold standard, your ability to preserve and store your wealth was diminished so your best option from there is to give it to a banker to protect. It was all downhill from there.
Central Banks...the cause and effect of the shitstorm we find ourselves in.
Therein lies the problem.
gold have 0% income - rolf, yes....so bad in new normal
Dallas Fed Chief Urges Power Shift at Bank
http://thehill.com/policy/finance/232524-dallas-fed-chief-urges-power-shift-at-central-bank
This signifies a major rift amongst the Fed Member (owner) Banks, and a rebellion against the owner of the NY Fed (GS? JPM?)...most likely by the owner banks behind the Dallas Fed...which I presume by reason of geography to be connected to the oil industry...and which, given a quick scan of the asset weighting of the largest known member banks, are most likely European in origin.
This is DB (and possibly UBS, RBS, and SG) screaming.
Might want to dig in to this Tyler.
The FED doesn't make it quite that easy...
The evil of the 2nd district is its monopoly on market operations, and the fact that the leadership and management is NY money-center-bank-centric. Whereas,
the 11th district (Dallas) has leadership and management that represents a more diverse economic ecosystem (perhaps slightly over-weighted to energy and transportation, but not to the degree NY is almost exclusively focused on GLOBAL ponzinomics)
GS's strength has always been its alumni network/cabal, and as primary dealer and market maker. As a bank and FED owner/member GS is literally on PAR with that cut-rate bumb who serves the po' folk - Chuck Schwab...
But the four big banks (JPM, BoA, Wells, Shiti) are well diversified (both in terms of which districts the top of their BHC pyramids fall into*, and the distribution of their assets across districts). For example while JPM has over 5000 registered subsidiaries (most of which are off-shore SPVs), they also have over 5,000 offices in 26 states, so their "ownership of the money supply" and influence is diversified across FED districts (although obviously concentrated in NYC).
* [which can be different than the district they fall into for purposes of regulatory supervision, which was Fisher's proposal - which would address and undercut FRBNY regulation of NY money-center banks and a lot of the domestic subsidiaries of foreign banks]
EDIT: complete speech link- http://www.dallasfed.org/news/speeches/fisher/2015/fs150210.cfm
Not to quibble... but yes all the banks in the 11th district are 'technically' member banks... but we know that when it comes to policy they are not all created equal.
We know the listed Euro-banks are owner banks. Via FOIA request they received a cumulative of $9T in 2008-2010. If they were normal member banks those transfers would have been documented as part of normal business, and no FOIA rquest would have been necessary to discover the destination of the cash. Yet the cash was transferred in an opaque manner. And if they were not owner banks there would have been no covert means to get the money to them in such a black-out manner.
$9T is a lot of cash. There's really no other way that I know of to move such a quantity without making a pig-in-the-python signature...yet it was done in complete darkness. Hence the conclusion, they were already owners such that no transfer, not even to an excess reserve account, was necessary.
You can also examine the banks own investment weighting to see what industrial areas they are overweight.
Then it is a matter of correlating their investment weighting to the Fed regional bank handling the relevant industries' mass of transactions.
Granted, it is still an analytical SWAG. But it follows, and matches the evidence.
There is no European ownership of the Federal Reserve. The district banks are owned by the banks operating in their districts, which are US domiciled. The licensed US subsidiary of a foreign bank is also US domiciled, and would be an owner if the district bank(s) in which it operates, but only in proportion to its US asset base. And since most of them are in NY, they are dwarfed by the homegrown money center banks and their interests- one of which is not to have major counter parties blow up and force them to realize losses. Bailing out foreign banks either directly or indirectly through their parent BHC's CB is done less transparently, because of the bad optics.
Back on topic...
Wasn't Sweden making headlines just a few months ago for making the switch to all-digital currency?
Doesn't all digital currency facilitate QE greatly by lowering the cost of monetary base-money production to, essentially, zero?
WHAT AN AMAZING COINCIDENCE!!!!
How's that working out for you average Swedes now?
They have not made the switch, but the average swede pays 68% of his income in taxes.
http://www.comparegoldandsilverprices.com/failure-of-socialized-health-c...
Why would anyone leave money in the bank these days...?
If they asked me what I needed it for, I would smile and tell them " I'm going gambling at the banks new casino/boat, House of Chase...
Hello everyone here @ ZH!
At the moment there is a "Live Chatt" going on at Svd.se.
Started at 14:30.....
I've sent 3 questions to swedish CB-Cheif Stefan Ingves....in swedish.
If the Svd-mod allows my Q/A answers, I'll let you B's know. OK?
....let's see how the free press works in Sweden for the moment.
Regards X-
There is no free press in Sweden. The press in Sweden is subsidized by the government quite literally.
That was the case about 20 years ago.
It was called *presstöd*.
If one is more realistic, it's more or less the same as in the UK/US press....owned by a few capitalist families & corporations.
Look's like the swedes at Stureplan/swedish banking cartel/right-wing press @ Svd.se/ Usa's embassy at Djurgården's Bridge.....all working together.
It's called, self/state,TPTB denial. No real answers and definitely no answers regarding my 3 questions. Typical 'chicken swedes'. ;)
Here's the link to the Q/A with Ingves: "Är verkligen deflation så farligt?" / "Is Deflation really so dangerous?".
http://www.svd.se/naringsliv/nyheter/naringsliv-live/chatta-med-riksbankschefen-om-minusrantan_4326211.svd
My 3 questions were in swedish:
1) Hi Stefan!
Den eviga frågan när det gäller "privatekonomi" är, "Spara eller Slösa?".
Jag och min fru Hilkka är 50-talister(och nysvenskar) som har gnetat ihop genom att spara/amortera istället för att tillåta/förvänta oss att inflation ska ge en grundtrygghet vid pensionering.
Allmänt har 40-talister Anna Hedbergs pensionsöverenskommelse, 100% ränteavdrag och 1975-95:s extrema inflation, avdragsgiltiga privata pensionsförsäkringar/IPS, mm att fylla på spargrisen.
Jag ser inflation som ett stort problem i våran vardag: Mat, Försäkringar, Kommunal skatt & avgifter, Fjärrvärme räkning, Elkostnader med skatt, Bredband mm ökar varje år!
Deflation finns inte för oss, bara när det gäller sjukpenning och arbetslöshetsförsäkring.
Min fråga är: “Varför ska vi som sparar straffas och dom som slösar gynnas?”
Det går emot allt sunt förnuft; Spara, Investera, ger långsiktiga utdelning för hela samhället.
Att introducera –negativ ränta och trycka sedlar(QE) slaktar värde på Svkr/svenska kronan.
Banks Win, People Lose?2) Förre i tiden kallades dagens åtgärd för “devalvering’, dvs Riksbanken medvetet urholkar Svkr-svenska kronas värde.
Är Riksbankens åtgärd en klassiks “Devalvering”?
3) Är det inte bättre för svenska folket att kronan knyts till guld, “Gold Standard”?
Sånt skulle vara definitivt attraktiva för utländska investeringar/kapital, eller hur?
Värde/Value gynnar en valuta, eller hur?
På långsikt är IMF-SDRs mer attraktivt för Sverige än en “Guld Krona”?
IF 10 of you here(b^tches) want a translation of my questions....I'll spend the 60 minutes doing an exact translation....
10 votes up, I'll start...
Regards X-
can i get a 1000 year mortgage, and then just keep the house?
Xswede
Det behövs inte en översättning för mig själv. But I never would have guessed that I would read that much Swedish on ZH. I'll upvote you anyways.
Sweden is a Marxists wet dream.
A feminist haven and a nightmare country for any man who finds him self a resident in this shithole country.
Was always told that Swedes were the happiest people in the world with a strong economy.
Now they're introducing NIRP.
Who will NIRP apply to????? Certainly not the 1%'ers because due to all the high taxes being levied, the 1%'ers left Sweden long ago. So, for the regular shmuck living in Sweden, he can look forward to not only paying 68% income tax, but on top of that, the banks going to take a little off the top on your bank account.
If there was any country in the world that deserves to get fucked over more, it's Sweden.
Oh, and I'll piss standing up thank you very much you femmie cunts!