ISTANBUL

Sweden's Central Bank decided on Tuesday to cut its policy interest rate by 0.25 percentage points to 3.5%.

The bank also signaled two or three new rate cuts for this year as the inflation outlook remains at the same level.

"Inflation is close to the target and expected to remain so even in the slightly longer term. However, the outlook for inflation is uncertain," the bank said.

Economic growth is weak and developments in the labor market are subdued, the bank said, yet added that unemployment is not expected to rise much further.

"There are risks linked, for instance, to the geopolitical situation, economic activity in Sweden and abroad, and the krona (local currency) exchange rate that can lead to a different outcome for inflation and thereby a different monetary policy," it said.