Sweden central bank holds repo rate in surprise move, expands bond buying

STOCKHOLM (Reuters) - Sweden's central bank surprised markets by holding its benchmark interest rate at -0.25 percent on Wednesday, but it expanded its asset purchase programme to nurture inflation, which it said had begun to rise after two years of stagnant prices.

Analysts in a Reuters poll had forecast a rate cut to -0.35 percent and further bond purchases of up to 50 billion crowns.

"The expansionary monetary policy is having a positive impact on the Swedish economy and inflation has begun to rise," the Riksbank said in a statement.

But it also said it would buy 40 billion to 50 billion crowns' ($4.7 billion-$5.91 billion) worth of government bonds on top of an ongoing programme of 40 billion crowns of purchases.

($1 = 8.4606 Swedish crowns)

(Reporting by Stockholm Newsroom)