Sweden: The Mistake Yellen Wants to Avoid
Swedish policy makers were forced to take unprecedented measures this month to shore up inflation
Stefan Ingves, the Governor of Sveriges Riksbank, the central bank of Sweden.
Photographer: Johan Jeppsson/BloombergThis article is for subscribers only.
Women-friendly work laws. An inclusive social safety net. Beautiful bike lanes. While there's a lot to love about what Sweden's policy makers have done, here's one blunder the U.S. will want to avoid: Underestimating the dangers of too-low inflation.
This month, after one year of too-slow price gains and another two years of falling prices, Sweden's central bank was forced to take unprecedented action. The bank slashed interest rates into negative territory in addition to announcing its intention of buying government bonds.