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Sweden's Central Bank Raises Interest Rates to 3.5%

Sweden's central bank raised its key repo interest rate by 25 basis points on Wednesday as expected, taking interest rates to 3.50%, their highest level since March 2003.

The increase was the second this year after the Riksbank tightened monetary policy six times in 2006.

All 17 economists and analysts polled by Reuters last week had forecast the 25 basis point increase due to surging economic growth, a tightening job market and hefty wage rises.

The Riksbank has a target of 2% inflation over a two-year horizon, with a 1.0% cushion either side. Inflation was 1.7% in May.

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