Sweden's central bank cut interest rates by 50 basis points to a new record low of 0.5 per cent today to fight the country's worst recession since the 1940s.
Economists in a Reuters poll had been evenly divided between a reduction of 75 basis points and a cut of 50 basis points, though the median forecast was for the larger cut.
Interest rates had already been at their lowest since records began in 1907 and the latest move means the central bank has little room to influence the economy further through traditional monetary policy.
“The lower interest rate and interest rate path are necessary to dampen the fall in production and employment and to attain the inflation target of 2 per cent,” the Riksbank said in a statement.
“The repo rate is expected to remain at a low level until the beginning of 2011.”