Sweden's central bank announced Thursday it would raise interest rates from 2.50 per cent to 2.75 per cent, citing continued higher economic growth and inflation, ACCORDING TO DPA. The board of governors agreed to raise the key repo rate by 0.25 percentage points at their meeting Wednesday. The central bank said it expected the Swedish economy to be "relatively strong for the remainder of this year and during next year." The Riksbank raised its GDP forecast for 2006 from 3.7 per cent to 4.3 per cent, and said next year it would be 3.1 per cent compared to the earlier forecast of 2.8 per cent. Inflation was estimated to be slightly below the 2.0 per cent target level for the coming two-year period, the central bank said, saying it was "partly due to temporarily falling energy prices, but is then expected to rise." Inflation measured as consumer price index (CPI) was forecast at 1.4 per cent for 2006, down from the 1.5 per cent in previous estimates and was estimated at 2.1 per cent in 2007, slightly lower than the 2.3 per cent earlier predicted. The rate hike was expected and will take effect on November 1. The board of governors said it did not rule out further hikes, in line with market expectations. Sweden has not introduced the joint European currency, the euro.
