Sweden's central bank the Riksbank said on Thursday that it would cut its key interest by a quarter of a percentage point to a record low 0.25 percent.

A lower interest rate is needed to counteract the fall in production and employment and to attain the inflation target of 2 percent, the Riksbank said in a statement.

The information received in recent months points to the economic downturn in 2009 being somewhat deeper than the Riksbank forecast in April, the statement said.

In April the Riksbank lowered its key interest rate to 0.50 percent.

The new cut will take effect on July 8. The Riksbank expects the rate to remain at this level over the coming year.

The Riksbanken also lowered its forecast for Sweden's 2009 gross domestic product growth to a negative 5.4 percent from a negative 4.5 percent in April.

(Xinhua News Agency July 3, 2009)