Riksbank hikes but hints at cuts to come

The Riksbank raised rates to a 12-year high on Thursday but indicated that it was likely to cut borrowing costs more sharply than previously thought next year.

The quarter point hike leaves rates at 4.75%, their highest level since October 1996. It is the central bank's second-straight rate rise.

"The rate increase is necessary to prevent high inflation from becoming entrenched," the central bank said. "Inflation has risen substantially and is at its highest level since the mid-1990s." Inflat