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Home BUSINESSLow interest rates not to be taken lightly: Governor
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Wed, 22 Apr, 2015 12:01:08 AM
FTimes – STT Report, April 22

Bank of Finland Governor Erkki Liikanen has warned against too much reliance on low interest rates.

The current low interest rates may invite a casual attitude towards the state debt, said Liikanen during the opening ceremony of Bank of Finland Museum exhibition on Tuesday.
According to Liikanen, the country’s borrowing should be looked at very carefully, since the long-term growth expectations have declined due to, among other things, the contraction of the working age population.

The current very low interest rates are also part of the outcome of the central bank’s government bonds purchase programme, which were initiated in the Eurozone in early March.
Liikanen said the latest information on public finances show the outlook to be even worse than previously estimated.

The recent reviews published by officials from the Ministry of Finance on the scale of adjustment needs can be justified.

He said, “It is important that the fiscal adjustment programme be decided upon at the beginning of the parliamentary term.”

A credible programme, according to Liikanen, is sufficiently specific and binding.

The implementation of the measures could be done gradually; however, it is important that some of the measures enter force as early as 2016, advised the governor.



 

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