Swedish Money Supply Growth Accelerates Further
While the previously red-hot money supply growth in the Euro-zone have slowed somewhat, to "only" 7.3% in December 2005 (which however is still way above the ECB's own target of 4.5%), Swedish money supply growth accelerated sharply during December. Money supply grew a whopping 3.4%in just one month (That translates into a annual rate of 49%), meaning that the 12-month growth rate rose from 7.2% in November to 9.9% in December.
Meanwhile, separate statistics showed that the household debt burden rose by nearly 14% in December, up from 13% previously reported here.
These developments are clearly the result of the Riksbank policy of keeping interest rates absurdly low at 1.5%. They recently reversed a small part of that cut by lifting the rate to 1.75%, but that is still far too low to avoid deepening the increasing monetary imbalances in the Swedish economy.
Meanwhile, separate statistics showed that the household debt burden rose by nearly 14% in December, up from 13% previously reported here.
These developments are clearly the result of the Riksbank policy of keeping interest rates absurdly low at 1.5%. They recently reversed a small part of that cut by lifting the rate to 1.75%, but that is still far too low to avoid deepening the increasing monetary imbalances in the Swedish economy.
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