Swedish central bank raises key interest rate, sees more tightening

Sweden's central bank raised its policy rate by a quarter percentage point to 3.75% as expected on Thursday and said it had decided to increase the pace of government bond sales. Analysts in a Reuters poll ahead of the decision were unanimous in forecasting a quarter-point hike.

Sweden's central bank raised its policy rate by a quarter percentage point to 3.75% as expected on Thursday and said it had decided to increase the pace of government bond sales.

Analysts in a Reuters poll ahead of the decision were unanimous in forecasting a quarter-point hike. "The forecast is for the policy rate to be increased at least one more time this year," the Riksbank said in a statement.

Headline inflation in Sweden has started to come down, but remains much too high at 6.7% in May against the central bank's 2% target. At its previous meeting in April, the Riksbank raised its key rate by a half percentage-point to 3.50% and said it expected to hike again by 25 basis points in June or September before drawing a line under its tightening cycle.

Markets have been pricing in a further hike to take rates to 4% by year end.