MNI BRIEF: Riksbank Must Explore Radical New Tools: DG Breman

The Riksbank needs to look at new tools to deal with the next shock, including a dual interest rate model, Deputy Governor Anna Brenan said Tuesday. She said with interest rates currently so low, if further stimulus were needed in the short term, a return to a negative rate and further quantitative easing would be the preferred options but she said that dual rates, offering banks a rate lower than the policy rate for banks dependent on their lending, was a real possibility.

Breman said deeply negative interest rates, of say -5%, were not practical at present and was also dismissive of helicopter money as a practical option, with pure monetary financing not allowed by the EU and with the government able to finance borrowing as cheaply as the central bank.