Swedish central bank raises rates

Sweden's central bank, the Riksbank, has raised interest rates by 0.25 percentage points to 3.25 percent.

The bank said further rate rises were probable in the near future. In a statement, the bank said that its executive board’s assessment was that “the repo rate needs to be raised by a further 0.25 percentage points over the coming six months”.

“After that it will probably be possible to pause before making a further increase. The interest rate increases are expected to contribute to inflation being on target a couple of years ahead and to a balanced development of the real economy.”

The Riksbank said that open unemployment would fall over the coming years from 5.1 percent this year to 4.8 percent in 2008 and 4.6 percent in 2009.

The employment rate will rise by 2.1 percent this year, 0.9 percent next year, and 0.5 percent in 2009.