[ad_1]
The United States Congress just approved President Joe Biden’s gigantic rescue package. $ 1.9 billion, nearly 10 percent of America’s GDP, will be spent through subsidies, unemployment insurance and virus control.
Along with a thousand different suppressed needs that can be depleted when people have received their vaccine doses, the package is expected to be pure dynamite for the American economy.
It will raise prices, that is, higher inflation. And that has already caused interest rates to rise.
To the outside world, Bidens is Pain stimulants and the alleged rocket recovery are good news and bad news.
First, the good ones: The United States is the world’s largest economy and an important trading partner for almost every country. Therefore, the US stimulus is also global stimulus. For export-oriented Sweden, it is by no means insignificant.
But there are also things that are getting worse: Since the United States is the world’s largest economy and the dollar is the world currency, the environment is heavily affected by US interest rates. Since the turn of the year, they have risen. And the trend has reached Europe.
The yield on European public debt, which not only affects states but is also an important benchmark for others, has been gradually rising. It is true that very low levels.
Throughout the pandemic it has Both the European Central Bank and the Riksbank have tried to create a kind of financial cushion: cozy low interest rates, soft borrowing opportunities, lots of money in the economy. No one should have to hit a sharp edge.
The aim has been to prevent the economic turmoil during the virus crisis from degenerating into a true financial crisis or a more traditional type of recession.
That goal has been achieved so far. But the policy is threatened by rising interest rates. Europe receives only a small part of the US stimulus, but a fairly large part of the interest rate increase.
It was also a lot therefore, ECB Director Christine Lagarde struck with additional stimulus for euro countries in connection with the interest rate announcement on Thursday.
Lagarde explained that, in fact, the economy is doing as expected. But rising interest rates are a threat. Leaving it unattended can lead to a tightening of the overall economy. Therefore, more stimulus comes in the form of larger bond purchases in the program called Pepp. Interest rates fell immediately.
Sweden ends up in a situation. Certainly the economy has done much better than the European average. The need for help and support is less. But the interest rate hike that has spread from the US is even clearer here. Swedish government interest rates are now considerably higher than the German ones.
So far, the Riksbank has not intervened, not even by word of mouth. But Stefan Ingves will soon have some headaches too.
