Stockholm - Sweden's Central Bank said Thursday it will cut its interest rate next week to a record low 0.25 per cent, citing "the weak development of the economy."Sweden has been hit hard by the global economic downturn and exports have fallen, the Central Bank said in a statement.
In addition, the bank cited that the labour market was continuing to deteriorate rapidly.
The cut was to take effect Wednesday, the Riksbank said, adding it expected to the low rates to remain until autumn 2010 and it was hard to predict when the economy would recover.
In April the Riksbank lowered the repo rate to 0.50 per cent.
The rate cut - the latest in a row reducing the interest rate from 4.75 per cent in September 2008 - was aimed to boost demand and consumption.
Riksbank governor Stefan Ingves did not take part in the meeting Wednesday when the six governors met to set the new rates. The central bank said Ingves was currently in hospital undergoing "routine examinations" but his condition was not serious.
Two of the governors entered reservations against the decision.
Deputy governor Lars Svensson wanted to cut the repo rate to zero per cent while deputy governor Barbro Wickman-Parak supported the cut but made a reservation over the growth forecasts, the Riksbank added.
Sweden is a member of the European Union but is not in the single- currency eurozone.
