Central banks might be a lot less useful than they think in fighting deflation

Central bank governor of Denmark, Lars Rohde. Photo: Bloomberg

Peter Levring

Is the link between monetary policy and inflation broken? The central bank governor of Denmark, where nominal rates have been negative longer than anywhere else in the world, says there may be signs that the link has grown weaker.

"We're in a territory where we don't have very much experience, so we can't rule out the possibility that the relationship between rates and inflation isn't as strong as it used to be," Lars Rohde (62), said.