Sweden’s Riksbank has today raised its guiding interest rate by a half-point to 3.5% as the central bank tries to rein in double digit inflation.

The inflation rate, which came in at 10.6% in March, “is still far too high and underlying inflation has been much higher than expected during the first months of the year,” the bank said in a statement.

“The forecast indicates that the policy rate will probably be raised further by 0.25 percentage points in June or September,” it added.

Inflation in Sweden peaked in December at 12.3%, a more than 30-year high. It slowed slightly in January to 11.7% before unexpectedly spiking back to 12% in February.

The Riksbank noted that the slight fall in inflation in March was mostly a result of lower energy prices.

“Disregarding energy prices, inflation has been much higher than expected during the first months of the year,” the bank said.

Sweden’s inflation adjusted for fixed interest rates (CPIF) – the figure used by the Riksbank to guide monetary policy – was 8% in March, down from 9.4% in February.

The bank has increased the rate several times since April 2022, when it was at zero.

For 2023 as a whole, the central bank now expects the Swedish economy to contract 0.7%, and forecasts unadjusted inflation of 8.9% as well as rising unemployment.