Sweden Experiments with Negative Interest Rates
filed in Daily Buzz News on Aug.31, 2009
James Picerno submits:
As the world’s original central bank, it’s fitting that Sweden’s Riksbank has become the first to breach the zero-bound line by lowering one of its key interest rates to negative 0.25% since July 8.
The drop in the price of money below zero is reportedly the first of its kind. The dip refutes the idea that the zero bound was a barrier for monetary policy beyond which no central bank could tread. Back in 2004, Fed Chairman Ben Bernanke (a Fed governor at the time) co-authored a research paper that advised that "the nominal policy interest rate may become constrained by the zero lower bound."