The Swedish government's decision to hike interest rates a stunning 6 percentage points, to 17.5%, in early December shows that Prime Minister Carl Bildt is committed to a painful, tight-money restructuring of the troubled economy. His immediate goal was to scotch rumors that the krona might be devalued. In the weeks after the 12.3% devaluation of the Finnish markka in November, an estimated $4.3 billion in flight capital left Sweden. Bildt also wants to show his own industrialists and the European Community that he will take tough measures to curb 8% inflation and bring Sweden's productivity in line with the EC -- rather than go the easy devaluation route. He will likely follow the rate hike with a new budget in January that, among other cuts, clamps down on Sweden's cherished health and child care benefits.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Smartphones Are Killing Americans, But Nobody’s Counting
- Why a Pub in the Middle of Nowhere Was Named the World’s Best Restaurant
- Ford to Take $267 Million Hit From Recall of F-Series Trucks
- Gulf Coast Oil Spill May Be Largest Since 2010 BP Disaster
- Facebook and Google Helped Anti-Refugee Campaign in Swing States