Mr Svensson has warned of the dangers of extreme deflation adding to the current economic crisis. One way he has mentioned to raise inflation is to let the Crown sink, thus ’importing’ inflation from other countries, as foreign investors and buyers find the weak crown more attractive.
Critics have said that this kind of talk has actually contributed to the currently weak Crown. But the government and the Central Bank have an inflation target of 2%, and Stefan Ingves underlines that they are quite happy with how this is handling the current situation.
You can hear Loukas Christodoulou’s recent interview with Lars E. O. Svensson, with more details on this topic