tisdag 17 december 2013
Another Blow by Swedish State Bank to Inflate the Bubble
The Swedish State Bank to day announced as expected that the repo rate will be lowered by 0.25% to 0.75% in order to force the inflation to increase from depressing 0% to the optimal level of 2% set by the Swedish Government.
But nobody believes, not even the Bank Chairman Stefan Ingves, that the inflation will react at all from the resolute step taken by the bank. This gives new support to my earlier analysis that it is the inflation that determines the repo rate, and not the other way around.
The only effect of the lowered repo rate is a new push up on real estate and stock prices, which with close to zero interest rate can reach any heights. Since the lowering of the interest rate is 25% (0.25% out of 1%) it is to be expected that real estate and stock bubble will inflate by 25%.