STOCKHOLM: Sweden's central bank raised its key repo rate by 25 basis points to 1.75 percent as expected on Wednesday, the sixth increase in a row as it seeks to cap inflation amid rapid economic growth.
The bank, which has also spoken of the need to cool rapidly rising house prices to avoid a real estate bubble, said it expected underlying inflation to increase as economic activity strenghtened.
All 17 analysts in a Reuters poll had forecast the quarter point hike. All but one said they expected another rate rise at the bank's next meeting in July.
"CPI inflation is now high as a result of rising mortgage rates. To stabilise inflation the repo rate needs to increase towards more normal levels," the Riksbank said in a statement.
Sweden's economy, which recovered rapidly from its deepest recession since World War Two, grew 7.3 percent year on year in the fourth quarter of 2010 and its inflation rate hit 2.9 percent in March.
The Riksbank targets consumer price inflation of 2 percent.
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