Leaning against the wind does more harm than good, warns Svensson


‘Leaning against the wind' – the policy of raising interest rates to curb the build-up of financial imbalances – is likely to increase rather than decrease household debt levels, thereby exacerbating risks it is meant to curtail, former Sveriges Riksbank deputy governor Lars Svensson writes in the new issue of Central Banking Journal, adding the policy moreover undermines inflation targeting and the pursuit of full employment.

Svensson levels specific criticism at his former colleagues on the

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