Sweden's central bank took its key interest rate further into negative territory today in a surprise move aimed at supporting a return to inflation. 

The Riksbank cut its repo rate by 0.15 percentage points to -0.25%.

It also said it was buying government bonds worth 30 billion kronor (€3.2 billion) to prevent an appreciating krona from hindering an uptick in inflation. 

"The executive board of the Riksbank assesses that an even more expansionary monetary policy is needed to support the upturn in inflation and ensure that long-term inflation expectations are in line with the inflation target," the bank said. 

Sweden is a member of the European Union but not of the euro zone and so retains control, via its central bank, of monetary policy and interest rates. 

Inflation has been close to zero in Sweden since late 2012 and in February it was at 0.1%, far below the target of 2%. 

The bank said the weakening trend had bottomed out and inflation was beginning to rise but that the rising krona - up 5% against the euro over the past month - could halt the increase. 

European central bankers have been battling to end the trend of falling prices. 

Although lower prices sound like they should be positive for consumers and the economy, economists fear that they could touch off deflation in which shoppers put off purchases in the belief that prices could fall further. 

This leads to a spiral of ever weaker demand, slowing the economy and pushing up unemployment. 

Sweden's repo rate serves as a reference between the central bank and the country's commercial banks during refinancing operations. The rate also acts as a guide for rates on money markets and today's latest cut will further drive down the cost of credit. 

The bank's decision to buy government bonds has the same aim of boosting a return to inflation and will take place between March 26 and the end of May.