October 24, 2018 / 7:55 AM / 10 months ago

UPDATE 1-Swedish c.bank holds rates, on track for Dec or Feb hike

* Central bank repeats repo rate forecast

* Says policy needs to be cautious

* Crown weakens slightly on decision (Adds analyst comment, crown reaction)

STOCKHOLM, Oct 24 (Reuters) - Sweden’s central bank held its benchmark rate unchanged at -0.50 percent as expected on Wednesday and repeated that it expected to tighten policy for the first time in more than seven years either in December or February, despite slowing growth.

Worried about meagre inflation, the Riksbank has adopted an ultra-cautious approach to monetary policy in recent years, first cutting rates deep into negative territory and then holding them there despite strong growth and a booming housing market.

But rate-setters now sound confident inflation is back on track despite cutting their forecast for growth this year to 2.3 percent from 2.9 percent.

“The forecast for the repo rate is the same as in September and indicates that the repo rate will be raised by 0.25 percentage points either in December or February,” the central bank said in a statement.

The crown weakened slightly on the decision.

All 18 analysts in a Reuters poll had forecast no change.

However, they were evenly split on whether the world’s oldest central bank would tighten at the following meeting or wait until early 2019 before beginning to raise rates.

“We still think they will hike in December,” Nordea economist Torbjorn Isaksson said.

After undershooting the inflation target for so long, Governor Stefan Ingves has led a majority of the policy board in stressing the risks of moving too quickly.

But headline inflation rose to 2.5 percent in September after having been steady around the 2 percent target for more than a year, and even underlying prices have perked up.

Deputy Governor Henry Ohlsson has been voting for rate hikes since February and was joined this time by his colleague Martin Floden.

Longer term policy remains uncertain. A stronger crown, trade frictions and a slowing global economy could make it hard for the Riksbank to deliver the two hikes a year it has forecast.

Interest rate, inflation, currency: tmsnrt.rs/1qEN4Rz

Reporting by Stockolm Newsroom; editing by Niklas Pollard

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