Sweden's central bank has slashed rates to historic lows to reverse a year-long fall in consumer prices. The economy has surged and inflation has shown signs of picking up, but a stronger crown threatens to undo that.

The Riksbank cut the key repo rate 0.15 percentage points to -0.25 percent and said it would buy 30 billion Swedish crowns ($3.40 billion) of government bonds after already completing 10 billion crowns of purchases.

"This shows they are going 'all-in' to reach the inflation goal," Magnus Alvesson, head of forecasting at Swedbank, said.

The moves, which came outside the central bank's regular rate-setting schedule for the first time since the height of the financial crisis, took markets by surprise and sent the crown tumbling to around 9.33 to the euro from 9.17.

"The bank will probably cut rates again and also extend the purchasing program even further," banking group Nordea said.

Critics of the central bank say it was too fast in hiking rates after the financial crisis and too slow to cut them when faced with a rising threat of deflation.

Playing catch up, the Riksbank adopted negative rates in February and said it was ready to do whatever it took to get inflation moving up towards its 2 percent target, a level it has not reached since the end of 2011.

But its policies have been undermined by weak oil prices and the "big bazooka" of 60 billion euros a month in asset purchases by the European Central Bank.

"Unfortunately, when you have the ECB in your back garden taking the action they've taken, it's very, very difficult not to get involved in doing a similar monetary policy," Gary Jenkins, credit strategist at hedge fund LNG Capital, said.

The Swedish crown had appreciated more than 5 percent against the euro in the period between the last rate cut and Wednesday's announcement. Policy-setters had been trying to talk the currency down, with little success.

The central bank said it remained on alert to take further action if necessary, including lowering rates further, buying even more government bonds and launching a program of loans to companies via the banks, as well as other measures.

"These include the possibility of interventions on the foreign exchange or buying other types of assets," the central bank said.