Scott Sumner links to a Lars Svensson post which comes hard on the hawks at the Riksbank, starting with its Governor Stefan Ingves (who hired an outside consultant to justify the wrong moves he advocated).
The Swedish story is a sad one. After the mistake of raising rates in mid-2008, afraid of the oil “price spill”, a move, it must be said, Lars Svensson agreed with, nominal spending (NGDP) was on a sure path back to trend. A second oil “price spill” brought the hawks out in full force, with rates going up 8-fold! This time Lars Svensson, having learned from the earlier mistake, opposed.
The story illustrated:
Now, Sweden is grappling with negative rates to avoid deflation becoming entrenched.