Disaster economics brings appetite for safe assets and policy makers must work harder to reduce fear, Swedbank said in a report.

Low policy interest rates and the high risk of recession and deflation are holding down bond yields, but the disaster risk influencing investors to choose the return of capital rather than the return on capital may also be important.

Disaster economics has consequences for economic, and not least monetary policy. Thus, policy makers must work harder to build confidence and to reduce fear.