The Swedish central bank has decided to raise its key interest rate by a quarter of a percentage point to 4.75% to counter inflationary pressures.
The Riksbank said the rate was likely to stay at this level for the rest of the year. The increase was the third this year and the bank had previously hinted a fourth rate hike might be in store before 2009.
It said it had now changed its mind on future rates moves as oil prices had fallen and growth had slowed by more than expected in Sweden and abroad.
In July, Swedish inflation stood at 4.4%, more than twice the central bank's target of 2%.
