Sweden's central bank cut its key interest rate for the first time in eight years on Wednesday, citing easing inflation and hinting at two more reductions before year-end.

The rate was reduced by a quarter-point to 3.75 percent as "inflation is approaching the target while economic activity is weak," the bank said, adding that "if the outlook for inflation still holds, the policy rate is expected to be cut two more times during the second half of the year."