The Riksbank announced a temporary credit facility with commercial paper as collateral. This is akin to the loan programs that have been used by the Fed. They refer to it as "credit easing" not "quantitative easing" Obviously, the continued use of these types of programs shows there are still credit problems around the world. The Riksbank has increased their balance sheet by over factor of three from 200 billion SEK to 700 billion SEK.
Interestingly, the central bank balance sheet relative to GDP for a number of the European central banks has been much larger than for the Fed. The ECB, Riksbank, and BOJ have all been more aggressive relative t the Fed. The BOE has been similar in its response while the BOC has been more conservative.
The current Swedish forecast is similar to the US. The recession has hit bottom but the recovery has been weak. This similarity across central banks has been the driver for the convergence of rates, but that may change this Fall if we start to see more changes in GDP. Divergence will be the new rule of the day.
Interestingly, the central bank balance sheet relative to GDP for a number of the European central banks has been much larger than for the Fed. The ECB, Riksbank, and BOJ have all been more aggressive relative t the Fed. The BOE has been similar in its response while the BOC has been more conservative.
The current Swedish forecast is similar to the US. The recession has hit bottom but the recovery has been weak. This similarity across central banks has been the driver for the convergence of rates, but that may change this Fall if we start to see more changes in GDP. Divergence will be the new rule of the day.
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