September 6, 2018 / 8:17 AM / 9 months ago

UPDATE 1-Swedish central bank holds rate, December hike in doubt

* Benchmark rate on hold at -0.50 as expected

* Riksbank gives itself more time for rate hike

* Sees tightening in December 2018 or February 2019

* Crown weakens on policy statement (Adds central bank comment, crown reaction)

STOCKHOLM, Sept 6 (Reuters) - Sweden’s central bank left its benchmark rate unchanged on Thursday, but said it now expected to start tightening either in December or February, giving it more time to gain confidence that inflation is steady around its 2 percent target.

At its previous meeting in July, the central bank had said its first rate increase since 2011 might come either in October or December this year.

The Riksbank has kept rates unchanged at -0.50 percent since early 2016, despite growing evidence the economy is firing on all cylinders and inflation close to target over most of that period.

On the other hand, underlying price pressure remains weak. Stripping out volatile energy prices, inflation has trended lower over the last year to stand at 1.3 percent in July .

“The forecast for the repo rate indicates that it will also be held unchanged at the monetary policy meeting in October and then raised by 0.25 percentage points either in December or February,” the Riksbank said in a statement.

The Swedish crown weakened against the euro after the decision.

Rate-setters were split over the timing of policy tightening. Deputy Governor Martin Floden wanted a hike in October. His colleague, Henry Ohlsson, has voted to tighten at each meeting since February.

However, the majority of the board is cautious after years in which inflation has undershot.

Moving too quickly would probably see the crown - which hit its lowest level in nine years against the euro late in August - strengthen, squeezing imported inflation .

The European Central Bank is not expected to start raising rates until the second half of 2019.

And with no sign inflation is taking off, there is nothing to force the Riksbank to act.

Graphic: Interest rate, inflation, currency:

Reporting by Stockholm Newsroom, editing by Larry King

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