Sweden surprises with rate rise

Analysts said that the central bank may move to raise rates again

In a shock move Sweden's central bank has raised interest rates by a quarter of a percentage point to 4.25%.

The Riksbank said the move will help bring down inflation, which is running at 3.5%, well above the target of 2%.

Most central banks are worried about a global economic slowdown and have been reluctant to raise interest rates.

The Riksbank warned that economic conditions remained uncertain, and it expected growth to slow and the job market to weaken over the next year.

Given that gloomy outlook, analysts were surprised by the rise in interest rates.

"Against all expectations the Riksbank decided to tighten policy further at the meeting," said Henrik Gullberg, currency strategist at Calyon Crédit Agricole.

He also noted that the Riksbank signalled "at least the probability of further rate hikes in this cycle despite the focus elsewhere very much on policy easing".