Ingves Says Avoid Sweden’s Bonds After Driving Down Yield CurveJohan Carlstrom
Riksbank Governor Stefan Ingves said there’s little to gain from investing in Swedish debt after he embarked on a quantitative easing program to press down yields and weaken the krona.
“It’s not very advantageous to place money in Sweden at the moment,” Ingves told reporters after a speech on Wednesday in Stockholm. “That’s exactly what we want to achieve.”
Ingves last week held Sweden’s repo rate at a record low of minus 0.25 percent after two cuts earlier in the year. Policy makers instead stepped up their fight against disinflation by doubling a bond-purchase program to as much as 90 billion kronor ($11 billion).
Ingves said the Riksbank’s biggest concern is inflation and the exchange rate. But efforts to steer both are colliding with a global wave of central bank stimulus that’s devolved into a currency war.
“So far we think that, from a Swedish perspective, the measures that we have taken have worked well,” Ingves said. There is no “deflation in Sweden at the moment. On the contrary, we think inflation will pick up,” he said.
Policy makers are trying to restore faith in their 2 percent inflation target after recurrent bouts of deflation last year and as unions and employers prepare to set wages for large parts of the economy. Inflation hasn’t reached the target since late 2011.
The Riksbank has been accused by economists and business leaders of paying too much attention to the housing market and not doing enough to bring down Scandinavia’s highest unemployment rate. As recently as last year, Riksbank Governor Stefan Ingves warned that excessively easy monetary policy risked fanning household debt growth and property prices.
Ingves said Wednesday that while household debt growth isn’t sustainable, it’s now up to other policy makers to rein it in.
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