Swedish c.bank cuts rates by record 175 bps

STOCKHOLM (Reuters) - Sweden's central bank slashed its key interest rate by a record 175 basis points to 2.00 percent on Thursday, a shock move to try and prevent the economy from sliding deeper into recession.

The Riksbank said in a statement it expected rates to remain at that level over the coming year.

Markets were braced for a large reduction after the Riksbank said on Monday it was bringing forward a meeting by nearly two weeks. That, economists said, suggested the central bank saw the gravity of the situation and indicated a deep cut was in store.

But the move was far more dramatic than expected -- a Reuters poll this week showed eight of 15 economists expected a full percentage point reduction, with most others calling for 75 basis points.

The Riksbank lowered borrowing costs by 50 basis points twice in October as the global financial crisis intensified. Interest rates had never before been lowered by more than half a percentage point in one go.

Last Friday, data showed the Swedish economy suffered a second quarterly contraction in the third quarter.

(Editing by Mike Peacock)