Sweden's Riksbank building is seen in downtown Stockholm in 2008.BOB STRONG/Reuters
Sweden's central bank delivered an unscheduled interest rate cut and expanded its government-bond purchase plan as it struggles to revive price growth.
The benchmark repo rate was lowered to minus 0.25 per cent from minus 0.1 per cent, the Stockholm-based bank said in a statement. The bond-buying program will be expanded by 30 billion kronor ($3.4-billion U.S.), adding to the 10 billion kronor in purchases that started last month.
"These measures and the readiness to do more at short notice underline that the Riksbank is safeguarding the role of the inflation target as a nominal anchor for price setting and wage formation," the bank said.
Policy makers are living up to a pledge of doing whatever it takes to jolt the largest Nordic economy out of disinflation. Inflation has trailed the Riksbank's 2-per-cent target for more than three years.
The central bank is now in full crisis mode after coming under criticism for missing its inflation target and for focusing on household debt at the expense of the labour market. Policy makers have said they have wide array of measures if needed, including direct currency interventions.
Unemployment has remained stuck at around 8 per cent for the past three years, prompting criticism from economists including Nobel Laureate Paul Krugman, who called the Riksbank "sadomonetarists."
The krona has increasingly become a concern as central banks around the globe lower rates to weaken exchange rates. The European Central Bank is in the midst of an unprecedented stimulus program that is pushing the euro down.
The currency has strengthened about 4.5 per cent against the euro since mid-February, threatening to keep a lid on price growth.