Sept. 6 (Bloomberg) -- Sweden's Riksbank is poised to become the latest central bank to raise interest rates in the face of a global clamor for lower borrowing costs.

The Stockholm-based bank will lift the benchmark repurchase rate by a quarter point to 3.75 percent, the ninth tightening since January 2006, according to 17 of 18 economists surveyed by Bloomberg. The decision will be announced tomorrow at 9:30 a.m.

Policy makers, like counterparts in Norway, Poland and the Czech Republic, will look beyond the jump in corporate borrowing costs caused by losses in the U.S. mortgage market, and instead fight inflation at home. The Riksbank forecast in June that inflation will double to 2 percent, matching its target, while unemployment has fallen, and job vacancies have soared.

``They don't want to cut in response to global conditions when domestically they've got inflationary pressure,'' said Dominic Bryant, an economist at BNP Paribas in London. ``The data is strong enough for them to justify moving. I see a couple more rate hikes and then them sitting on their hands.''

Interest rates have also risen in Australia, South Africa, China, Chile and South Korea as officials determined that policy should respond to faster inflation and quicker economic growth.

At the same time, economists anticipate the European Central Bank will keep rates unchanged today, shelving a planned increase. The collapse of the American subprime-mortgage market threatens to further slow an economy that's already showing signs of slackening: Manufacturing slowed in August, and business confidence fell more than forecast. The Bank of England is also projected to leave its main rate at 5.75 percent today.

`Not Much Risk'

Sweden's central bank Deputy Governor Lars Nyberg said yesterday there's not much risk of the global rout spreading to the Nordic country.

``Should we expect the unrest on the international fixed- income markets to spread to Sweden?'' he said in a speech e- mailed by the central bank. ``I do not think there is much risk of this. Of course Sweden is not isolated from the rest of the world. The way in which a higher price for risk might affect the Swedish economy is one of the subjects we will have reason to discuss.''

By contrast, the U.S. Federal Reserve cut the rate at which it lends directly to banks and said on Aug. 17 that a policy shift was needed to shore up the economy, dropping language in its statement indicating a bias toward battling inflation.

Swedish Expansion

Sweden's economy may grow 3 percent this year, the government estimates, buoyed by consumer spending and rising investments. Unemployment fell to 5 percent in July from 6 percent a year earlier. Job vacancies have risen to the highest in ``several decades,'' according to National Labor Market Board.

Policy makers are concerned a mounting labor shortage may push up inflation. The bank forecast in June that annual consumer-price growth, excluding mortgage payments, subsidies and indirect taxes, will be 2 percent within a year. The rate was 1 percent in July and it has held below the 2 percent target for four years as productivity boomed.

Forward rates suggest the Swedish bank will raise the key rate. September's forward rate is yielding 4.09 percent and December's is at 4.26 percent. They settle to the three-month interbank offered rate, which has averaged about 0.2 percentage point more than the key rate this decade. September's rate fell to 3.93 percent on Aug. 17, after the Fed cut its discount rate.

The Fed is under pressure to lower its benchmark rate. Futures trading shows investors are betting the U.S. central bank will cut its benchmark rate at least a quarter percentage point, to 5 percent, at its Sept. 18 policy meeting.

Wage Growth

Swedish policy makers in June said that plunging unemployment, record wage gains and more government spending will force them to pick up the pace of rate increases this year.

The National Institute for Economic Research, a government- sponsored group, said last month that Swedish wages will probably rise 4.3 percent this year, and 4.7 percent in 2008. Unemployment will probably drop to 3.6 percent by 2009. The institute also forecast the bank will have to raise its key rate to 4.75 percent next year to contain inflation.

Economic data since June suggest there's little slackening in the pace of the Swedish expansion, as retail sales rose an annual 9.4 percent in July, the fastest pace in four months.

To contact the reporter on this story: Jonas Bergman in Stockholm at jbergman@bloomberg.net

Last Updated: September 5, 2007 19:15 EDT