In his article, "Less is more" for the IMF's magazine, Professor at the University of Chicago and former Governor of the Reserve Bank of India Raghuram Rajan said: "Central banks have constrained their own policy space with asymmetric and unconventional policies, ostensibly intended to deal with the policy rate touching the lower bound. They have triggered a variety of imbalances that are making fighting inflation harder today." More purposeful and less interventionist central banks would probably do better than a high-inflation, high-debt, low-growth world (Rajan, 2023). For central banks, less can mean more. Therefore, our strategy in the Czech Republic is "higher for longer", i.e. to maintain interest rates at higher levels for longer. Regarding government debt, I stated that monetary policy is at its tightest in 20 years and is slowing the economy. A problem arises if the government helps the economy with subsidies, supports and contributions at the same time. This counters our fight against inflation and the economy is not dampened as much as it should be. Therefore, the CNB must consider the following: Should we start competing with the government and dampen the economy by, for example, increasing rates? Should we further push down demand, just to have it subsequently fostered by the government with some kind of supports or subsidies? And so on ... it is a vicious circle. It would be better if both policies were anti-inflationary at the same time.
Negative real interest rate not unusual Per cent 40  40 Real short-term interest rate Nominal short-term interest rate  30  30  20  20  10  10  0  0  -10  -10  -20  -20  -30  -30  -40 1900  -40 1919  1939  1959  1979  1999  Note. The real interest rate is calculated using series for the nominal interest rate and inflation/inflation expectations. For the nominal interest rates, annual data from historical monetary statistics is used for the period 1900-1918, while the Riksbank's discount rate is used for the period 1919-1983 and after that the rate on a threemonth treasury bill is used. For inflation/inflation expectations, annual data from historical monetary statistics is used for the period 1900-1918, the cost-of-living index/CPI from Statistics Sweden is used for 1919-1979 and after that inflation expectations in the household sector for one year ahead, as calculated by the National Institute of Economic Research. Sources: National Institute of Economic Research, Statistics Sweden and the Riksbank  15 [20]  Figure 4. Good profitability in Swedish banks Return on equity, rolling four quarters, per cent  Note. Unweighted mean value. The red line refers to a selection of major European banks. Sources: The banks’ interim reports and SNL Financial Figure 5. Positive sentiment in household and corporate sectors Index, mean = 100, standard deviation = 10  Source: National Institute of Economic Research  16 [20]  Figure 6.