US President Donald Trump has long wanted to see lower interest rates in the US. But when the central bank, the Federal Reserve lowered the rate by 0.25 per cent to 2.25 per cent, he did little to hide his discontent that it was not lowered more.
Leading economists are now warning that the Fed needs to stand its ground to demonstrate its independence. However a top Swedish economist, Robert Bergqvist, SEB’s head economist, does not agree. He does not think that the Fed has been influenced by American politics and unlike American analysts he believes further interest rate reductions could come this year.
He also believes that Sweden will be affected by the decision.
“Monetary policy is to some extent global. The Swedish Riksbank must take into account what the Fed and the European Central Bank are doing. The Riksbank has indicated it will raise the interest rate later this year, but I think that they are going to have difficulty doing so.”
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