Investing.com - Sveriges Riksbank, Sweden's central bank, lowered its benchmark interest rate to negative territory on Thursday, as policymakers increase efforts to ward off deflation from taking hold in the largest Nordic economy.
The Riksbank said it was lowering the benchmark interest rate by 10 basis points to -0.10% from 0.0%, surprising most market analysts, who expected rates to hold steady.
In addition, the central bank said it will purchase government bonds for a sum of SEK10 billion and that it is prepared to do more at short notice.
In a statement accompanying the announcement, the central bank said, "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."
Following the announcement, the Krona plunged against the U.S. dollar, with USD/SEK rising 0.93% to trade at 8.4427, compared to 8.3753 ahead of the decision.
The Krona was also down sharply against the euro, with EUR/SEK jumping 0.94% to hit 9.5798 from around 9.4922 earlier.