Stockholm  - Sweden's Central Bank said Thursday it will hold its interest rate at a record-low 0.25 per cent, citing that it aimed to help contribute to the economic recovery with the move.

"The repo rate needs to be low over a long period of time to come to enable a stable development on the economy and to attain the inflation target of 2 per cent," the Executive Board of the Riksbank said in statement.

The financial markets also showed improvement but were still not normal, the bank said.

The Riksbank projected that GDP would decline by 4.6 per cent this year, but grow 2.5 per cent in 2010 and 3.4 per cent in 2011.

Sweden has been hit hard by the global economic downturn and exports have fallen, the bank noted.

The latest rate cut was announced in July - the latest in a row reducing the interest rate from 4.75 per cent in September 2008.

Sweden is a member of the European Union but is not in the single-currency eurozone.(dpa)