The Riksbank in Sweden has cut interest rates for the first time since July 2009, blaming the eurozone debt crisis.
The main interest rate was cut by 25 points to 1.75%.
In a statement, the bank said the weak development of the economy in the euro area is having a dampening effect on the Swedish economy.
Swedish exporters have seen a drop in orders and it forecast that exports would fall sharply next year.
The eurozone accounts for more than half of Sweden's exports.
The BBC reports the cut came as a surprise as the Riksbank said in October that no rate change was expected until 2012.
The bank has held rates since July 2011 after previously pursuing a policy of gradual rate rises.