Sweden's Central Bank raised its interest rate by 0.25 percent on Tuesday to 1.5 percent , leading to predictions of further rate hikes in the future.
The rise was the fifth since July and evidence of the strength of the Swedish economy and the need to dampen inflation.
“The Swedish economy is continuing to develop strongly. The underlying inflation pressure is still low in Sweden but is expected to grow as the economy strengthens,” said the bank in a statement.
“Rising energy and raw material prices also contribute to higher inflation. The repo rate needs to be gradually raised in order to stabilise inflation close to the 2 percent target.”