Stockholm - Sweden's central bank Thursday raised its key rate by one-quarter point to 4.5 per cent, citing inflationary pressures in the economy.

The bank said inflation had risen to the highest level since the mid-1990s, and further rate hikes would follow this year.

The Swedish bank's rate hike decision came while the European Central Bank governors were getting ready to meet in Frankfurt, with most analysts expecting the ECB also raising its key rate by 25 basis points to 4.25 per cent. (dpa)