Sweden's central bank held its benchmark rate unchanged at 0% as expected on Wednesday and expanded its asset purchase program to 500 billion crowns ($53.63 billion) as it looked to soften the blow to the economy from the still raging pandemic.
While Sweden has been hard hit by the pandemic and measures to slow the spread of infection, it looks to be through the worst and to have come off more lightly than many other countries.
The Swedish economy is expected to shrink around 6% this year, still the worst downturn since 1940, but better than the double-digit contractions forecast for many parts of Europe.
Nevertheless, the central bank said further measures were needed to support the recovery.
"To avoid an unnecessarily prolonged and deep decline in the economy and inflation, monetary policy needs to continue to contribute to the smooth functioning of credit supply in the economy and to keeping interest rates low," the central bank said in a statement.
The Riksbank said it would increase its asset purchase program by 200 billion crowns to 500 billion and extend its timeline to the end of June, 2021.
The central bank will also begin buying corporate bonds in September for the first time. Up to now, it has bought government debt, mortgage-backed debt, commercial paper and municipal bonds.
It has not cut rates, arguing that would not help much in boosting demand, but did not rule this out at a later stage.
Earlier this month, the ECB extended its emergency bond purchase scheme to mid-2021 and increased it by 600 billion euros ($675 billion) to 1.35 trillion euros.