Somebody get Paul Krugman a laptop - the "sadomonetarists" are at it again in Sweden.
That's a reference to Paul's cartoonish 2014 blog post in which he famously accused the Riksbank of being a bunch of prosperity-hating heretics for hiking rates in and around the European debt crisis.
Sweden, Krugman lamented, went from "rock star of the recovery" to "Japan", and all thanks to "a classic case of sadomonetarism in action."
Well, the “sadomonetarists” subsequently abandoned their sadomonetaristic tendencies on the way to NIRP. Fast forward seven years from the hikes Paul hated so much and four years from the blog post in which he declared that hatred, and the Riksbank has hiked rates. Here's a chart that shows you how this story has unfolded - the lonely red highlight over on the right-hand side represents Thursday's hike.
The krona surged on the news, although further gains will probably be capped by the dovish spin the Riksbank put on the decision.
Long story short, it looks like they're hiking now because they know the window is closing and by most accounts, the rate path was more dovish than expected. Nordea says the next hik
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