Sweden’s central bank should tread carefully in raising interest rates.

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The International Monetary Fund (IMF), an international organization that oversees the global financial system, said that Sweden has weathered the global downturn relatively well. It applauded the Riksbanks and government, pointing out that "aggressive stabilisation policies" had offset the impact of the global financial crisis.

But economic outlook still looks unclear for this and next year. The organization urged Sweden’s central banks to tread carefully in raising interest rates. The Riksbank plans to hike the rate level this summer from today's record low of 0.25 percent.

"Accordingly, the tightening cycle should be gradual and cautious, particularly given continued uncertainty over the implications of market strains in Europe," the IMF said.

"Whether the anticipated rate rises occur as indicated or a little later, they will leave the stance of monetary policy highly accommodative, without risk to the inflation targets."

The Scandinavian country was hard-hit by the global economic crisis but its economy quickly bounced back, returning to growth in the second quarter of 2009. The country's GDP increased by 3 percent in the first quarter compared to the first quarter of 2009; considerably stronger than expected.

However, uncertainty has recently increased, mainly on the back of troubled public finances in several countries in southern Europe.

"Future developments in Europe will be critical," Peter Doyle, the head of the IMF delegation, told a news conference. "Developments in Europe should be very closely taken into account by the monetary policy committee in determining policy."