Riksbank raises interest rates

Riksbank raises interest rates
Sweden's central bank, the Riksbank, has said it will raise its main interest rate by 0.25 percentage points to 4.50 percent.

“Inflation has continued to grow in Sweden and is now at its highest level since the mid-1990s.

“The repo rate will need to be raised another couple of times this year in order to prevent inflation from taking root,” said the Riksbank in a statement.

The bank said it expected the repo rate to average 4.5 percent for the third quarter of this year, 4.8 percent for the year’s final quarter, 4.9 percent for the third quarter of 2009, 4.6 percent for the same quarter in 2010 before dropping back to 4.4 percent in the third quarter of 2011.

The Riksbank has also revised its growth forecast for Sweden, and now predicts GDP growth of 2.1 percent this year, 1.2 percent in 2009 and 2.7 percent in 2011.

The country’s inflation forecast has been adjusted upwards, with consumer prices expected to rise by 3.9 percent this year, 3.5 percent in 2009 and 2.3 percent in 2010.