Must-Read: Martin Sandbu: Ask the big question on central banking: “Mervyn King and Goodfriend… the controversial decision by the Riksbank to raise interest rates…

…We will not adjudicate whether the decision was ‘not unreasonable’, as King and Goodfriend claim, beyond noting that every rich-country central bank that raised rates early in the recovery (that includes not just Sweden, but Israel, Norway, Denmark, and the eurozone) had to lower it significantly later. For more on this point, read Andrew Haldane’s speech from last year on the challenges of being stuck at low interest rates…