Sweden's central bank has raised its key interest rate by a quarter of a percentage point to 1.25 percent to stabilize inflation.
In Wednesday's decision, it said the country's economy is recovering at a record rate, but that inflationary pressures are still weak because of low labor costs. The Riksbank says the pressures are however expected to pick up as economic activity strengthens further.
The central bank says that to steer inflation near its target of 2 percent in the future it needs to hike the repo rate now to "more normal levels."
The increase is the fourth since July. Before that, the Riksbank had kept the repo rate unchanged at 0.25 percent for two years, after making sharp cuts in late 2008, at the height of the financial crisis.
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