Sweden ’s central bank, the Riksbank , does not see a housing bubble or bubble-like behaviour in the country’s housing market as has been reported.

Riksbank raised its base rate in December 2010 by 0.25% to 1.25%, after strong economic growth and rapidly rising inflation. In October inflation was just 1.5%, rising to 1.8% in November and jumping to 2.3%, (far above the bank’s target inflation rate), in December after substantial increases in housing costs and higher prices for electricity and food.

The Riksbank vice director, Barbro Wickman-Parak told the Swedish press that she sees the growing household debt as a problem because it is currently increasing by around 8% a year. “We have a debt ratio that we have not seen anything equivalent to”, she said.

The Swedish central bank now wants to keep raising interest rates to slow down inflation as well as dampen household borrowing. According to Riksbank, Sweden’s economy is at the start of a period of solid growth expected to last until 2013.

The bank raised its forecast for GDP growth in 2010 from 4.8% to 5.5%, with growth in 2011 expected to reach 4.4%, up from the previous forecast rate of 3.8%.

As a result, the bank explained that it has no plans to change the repo rate path it presented in October 2010, which forecasts the rate to reach 2% by the end of 2011, 2.9% by the end of 2012, and 3.4% by the final quarter of 2013.