Sweden’s central bank raised interest rates by 25 basis points to 4 per cent on Tuesday and used the announcement to caution for the first time that the country may not escape unscathed from global market turmoil.

The Riksbank’s decision to raise rates to their highest level in nearly five years was taken to damp inflationary pressures in an economy that is growing 3.1 per cent this year at the same time as unemployment is falling and consumer prices are rising.