Sweden's central bank has taken its key interest rate further into negative territory in a surprise move aimed at supporting a return to inflation.
The Riksbank cut its repo rate by 0.15 percentage points to -0.25 per cent on Wednesday and said it was buying government bonds worth 30 billion kronor ($A4.54 billion) to prevent an appreciating krona from hindering an uptick in inflation.
"The executive board of the Riksbank assesses that an even more expansionary monetary policy is needed to support the upturn in inflation and ensure that long-term inflation expectations are in line with the inflation target," the bank said in a statement.
Sweden is a member of the European Union but not of the eurozone and so retains control, via its central bank, of monetary policy and interest rates.
Inflation has been close to zero in Sweden since late 2012 and in February it was at 0.1 per cent, far below the target of 2.0 per cent.
The bank said the weakening trend had bottomed out and inflation was beginning to rise but that the rising krona - up 5.0 per cent against the euro over the past month - could halt the increase.
"The central bank had decided to keep the krona weak and is not satisfied with the resulting inflation increase," Thorbjoern Isaksson, an economist at Nordea bank told news agency TT.
European central bankers have been battling to end the trend of falling prices.
Although lower prices sound like they should be positive for consumers and the economy, economists fear that they could touch off deflation in which shoppers put off purchases in the belief that prices could fall further.
This leads to a spiral of ever weaker demand, slowing the economy and pushing up unemployment.
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