Finland Times

 

Sweden's central bank, the Riksbank, cut its main interest rate below zero on Thursday and announced other measures aimed at avoiding deflation.

     

The Riksbank lowered its repo rate, referring to rate at which the central bank lends to commercial banks, from zero to minus 0.1 percent and announced that it will buy government bonds for SEK 10 billion (1.19 billion U.S. dollars). The bank said it is prepared to do more at short notice.

     

In a statement, Riksbank said it was taking the measures because "there are signs that underlying inflation has bottomed out, but the situation abroad is now more uncertain and this increases the risk that inflation will not rise sufficiently fast."

     

The Riksbank has set a 2 percent inflation target.

     

Shortly after the announcement on Thursday, the Swedish krona dived to a six-year low and stocks hit record highs.