February 23, 2018 / 9:53 AM / 24 days ago

UPDATE 1-Inflation worries may delay Swedish c.bank's rate hike cycle

* Several rate setters worried about inflation

* Dovish signals hit crown, weakest since late 2016

* Riksbank held rates, rate path unchanged on Feb. 14

* Deputy Governor Ohlsson called for immediate hike (Adds further c.bank, analyst comment, crown reaction)

STOCKHOLM, Feb 23 (Reuters) - Growing worries about sluggish inflation could push Sweden’s central bank’s to delay its first rate hike since 2011, the minutes of the latest policy meeting showed on Friday.

The Riksbank has pulled out all the stops to push up inflation, including a negative benchmark rate and a hefty quantitative easing programme, and it has been broadly successful.

But inflation has dipped recently, making it more uncertain when the world’s oldest central bank will begin to normalize policy.

“Together with the January inflation, this points to a postponement of a first rate hike ... at the next monetary policy meeting in April,” Nordea analyst Andreas Wallstrom said.

The Riksbank held the repo rate steady at -0.50 percent and its rate path unchanged at its latest meeting.

But it gave itself more wiggle-room, saying rates would probably start to rise in the second half of 2018 rather mid-year as it had previously said.

Deputy Governor Henry Ohlsson voted for an immediate 25 basis point hike, but the other five members of the board took a different view.

“My impression is still that the forecast for the repo rate in the draft Monetary Policy Report means that the repo rate increases begin too soon,” Deputy Governor Per Jansson said in the minutes.

“It might be necessary to wait until December, or even until sometime next year.”

His caution was supported by several other rate-setters and the Riksbank’s dovish stance hurt the crown currency which hit its weakest level against the euro for more than a year.

Deputy Governor Cecilia Skingsley said she had considered supporting a forecast for a later start to rate hikes, while Governor Stefan Ingves said it was “important at present to be vigilant and cautious in our monetary policy”.

January inflation came in lower than expected and below the central bank’s 2 percent target, and is likely to add to the Riksbank’s worries.

While the Riksbank looks likely to err on the side of caution, Norway’s central bank, appears set to hike rates in December despite facing similar inflation headwinds.

Governor Oeystein Olsen said earlier this month Norges Bank could hike in response to higher economic growth at home and abroad, even though inflation remains well below target. (Reporting by Stockholm Newsroom; Editing by Simon Johnson, Robin Pomeroy and Peter Graff)

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