When I looked at the Financial Times this morning, I was struck by the following article entitled “Booming Sweden Raises Rates”.
Sweden is a small open economy, so the potential for monetary policy to be effective is limited. But, it is still notable that by aggressively reducing its lending rate to zero and not paying interest on reserves, the Swedish Riksbank has promoted a recovery. With the recovery come higher interest rates. Not the other way around. FOMC, please take note.