As expected, the Riksbank keeps the key interest rate on record low to support production and employment.

Central bank governor Stefan Ingves was not be able to attend or vote at the monetary policy meeting on Monday because of the air travel chaos in Europe.

• 'Wrong direction for a rate hike' this summer
• Large Swedish enterprises on the way up

After the deep global financial crisis the Swedish economy will grow this year and there appears to have already been a turnaround in the labour market, the Swedish central bank said Tuesday.

Therefore, the Executive Board of the Riksbank assesses that the repo rate needs to remain at a low 0.25 percent to support production and employment and to attain the inflation target.

However, it expects to begin increasing the repo rate in the summer or early autumn. The central bank is aiming for a rate of 1.1 percent in the first quarter of 2011.

"The financial market are more stable now and the recovery in the economy is continuing," the central bank said. "It is therefore appropriate to gradually move towards a more normal monetary policy".

The rate decision was expected by all 19 economists surveyed by Bloomberg.

It also revised downward its growth forecast for the Swedish economy, predicting a 2.2 rise in GDP for 2010. In February, it had estimated the Swedish economy would grow 2.5 percent this year.

Forecasts for inflation, GDP and the repo rate
Annual percentage change, annual average

	2009	2010	2011	2012
CPI	-0.3 (-0.3)	1.1 (1.6)	2.1 (2.9)	2.9 (3.1)
CPIF	1.9 (1.9)	2.0 (1.9)	1.3 (1.4)	1.8 (1.8)
GDP	-4.9 (-4.5)	2.2 (2.5)	3.7 (3.4)	3.1 (3.1)
Repo rate %	0.7 (0.7)	0.4 (0.4)	1.8 (1.8)	3.3 (3.3)

Note. The assessment in the Monetary Policy Report in February 2010 is shown in brackets. Sources: Statistics Sweden and the Riksbank