Sweden's central bank has cut its benchmark rate by more than expected amid worries about global growth. Like the ECB and BOE it's trying to boost inflation. But not everyone's convinced it will work. Sonia Legg reports.
It's an unlikely place to shock investors. But Sweden's central bank has prompted words like "panic" and "crisis" It's cut its main interest rate deeper into negative territory in an attempt to revive inflation. CMC Markets Michael Hewson says it's given central banks around the globe a problem. (SOUNDBITE) (ENGLISH) CMC MARKETS, MARKET ANALYST, MICHAEL HEWSON, SAYING: "Given the reaction to the Bank of Japan's recent cuts to the interest rate and the market reaction to that I think there is a growing perception that central banks are pulling on a string of lost control." Sweden's crown weakened sharply after the bigger than expected cut - prompting talk of global currency wars. It's thought the Riksbank was trying to beat the ECB which promised more measures in March to stimulate the euro zone. (SOUNDBITE) (ENGLISH) CMC MARKETS, MARKET ANALYST, MICHAEL HEWSON, SAYING: "Mario Draghi has got a big problem, if he cuts rates further into negative territory I would imagine he will illicit a counter reaction from the Bank of Japan, and a counter reaction from the People's Bank of China. Let's not forget that Chinese markets are off this week so when they come back next week it is likely to be very turbulent, I think we are going to see large falls in Chinese markets." There were big falls in Europe following the Sweden cut. The new worry is that policy easing in too many places will cancel itself out. (SOUNDBITE) (ENGLISH) CMC MARKETS, MARKET ANALYST, MICHAEL HEWSON, SAYING: "I think central bankers are running out of tools and some of the measures they are using speak of panic measures." As for Sweden - it has other worries too - a housing bubble is one. Property prices have risen by 12 percent over the past 12 months