Swedish Money Supply Growth Accelerates Further

While the previously red-hot money supply growth in the Euro-zone have slowed somewhat, to "only" 7.3% in December 2005 (which however is still way above the ECB's own target of 4.5%), Swedish money supply growth accelerated sharply during December. Money supply grew a whopping 3.4%in just one month (That translates into a annual rate of 49%), meaning that the 12-month growth rate rose from 7.2% in November to 9.9% in December.

Meanwhile, separate statistics showed that the household debt burden rose by nearly 14% in December, up from 13% previously reported here.

These developments are clearly the result of the Riksbank policy of keeping interest rates absurdly low at 1.5%. They recently reversed a small part of that cut by lifting the rate to 1.75%, but that is still far too low to avoid deepening the increasing monetary imbalances in the Swedish economy.