Steps:
- Position rack in center of oven and preheat to 350°F. Lightly butter 9x5x3-inch loaf pan. Line pan with parchment paper. Butter paper and dust with flour.
- Using electric mixer, beat 1 cup butter in large bowl until light. Gradually add sugar and beat until smooth and fluffy. Add eggs 1 at a time, beating after each addition until just combined. Beat in aquavit, caraway, vanilla extract and lemon peel. Combine flour, baking powder and salt in medium bowl. Sift dry ingredients over batter. Blend well, using rubber spatula.
- Transfer batter to prepared pan. Bake cake until deep-golden-brown crust forms and tester inserted into center comes out clean, about 1 hour 20 minutes. Transfer to rack and cool 10 minutes. Turn out cake onto rack, remove parchment paper and cool completely. Wrap tightly in foil and let stand at room temperature overnight. (Can be prepared 2 days ahead. Store at room temperature.)
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