"The Executive Board of the Riksbank has decided to make monetary policy even more expansionary by cutting the repo rate by 0.15 percentage points to -0.25 percent and buying government bonds for 30 billion kronor, to support the upturn in inflation," the central bank said in a statement on Wednesday.
Riksbank chiefs said that recent appreciation of the krona risks breaking a positive trend of rising inflation and added that the central bank had therefore decided to make monetary policy even more expansionary by cutting the repo rate yet again.
"This is surprising," Torbjörn Isaksson, macro economist at Swedish banking giant Nordea, told news wire TT.
"But the Riksbank has decided to keep the krona weak and does not settle for the rise in inflation we have had," he added.
The unexpected decision, which will apply from March 25th, follows the bank's move on February 11th to cut the repo to -0.1 percent, the first time in history there had been a negative interest rate in Sweden.
The central bank added in Wednesday's statement: "The repo rate is expected to remain at -0.25 percent at least until the second half of 2016. After that, it is expected to rise gradually."