"We will see a monetary policy with low interest rates"

The US Federal Reserve Federal Reserve (Fed) lowers the key rate by 0.25 percentage points. A decision that is not surprising, says Robert Bergqvist.

- It was very much expected. What we see is that you take out insurance - the economy is still doing well - but has slowed down somewhat. The reason for taking this interest rate cut is partly that you see weaknesses in the outside world but also that interest rates are at fairly low levels. Now you may find that an interest rate of 2.5 percent is high compared to other countries, but you can very easily end up near 0 percent. The central banks do not have the maneuvering room to act, so they often have to act earlier than expected, which is the case this time.

Is it not natural for business to go up and down?

- Absolutely - but what is unnatural is that in many countries, including Sweden, we will lack the monetary policy tool to handle the recession. Monetary policy is usually the first line's defense when we begin to see signs of weakness. When one cannot act, then our politicians are given greater responsibility and there it can be more complicated to develop the support policy.

The Swedish policy rate is even lower than the US. How will Sweden cope with an upcoming recession?

- It will be hard. The Riksbank's forecast is to raise interest rates at the end of this year or early next, but when we receive a message from the US and the ECB that it intends to lower the interest rate, it closes the door. For Sweden, we always have the opportunity through fiscal policy; our politicians can lower taxes, start investments, increase spending, which can stimulate growth.

- Normally, monetary policy is the first line of defense - so it will not be in the future. How can we get fiscal policy activated in a good way, without the politicians always having to make decisions? Most of all, the decisions should be made automatically, points out Robert Berqvist.

How well equipped is Sweden to cope with the recession with fiscal policy in order to stimulate the purchasing power of citizens?

- We are better equipped than many other countries. Looking at, for example, the budget balance and government debt in, for example, other countries, we are stronger than them. We have the opportunity to help fiscal policy - we just have to find the right policy.

What should we Swedes expect?

- We will see a monetary policy with low interest rates, which is good for borrowers in the housing market. If the economy starts to slow down significantly - there may be times when the government with other parties agree to invest in fiscal policy. We have this tool unlike many other countries.