Sweden's central bank kept interest rates unchanged on Thursday following its first cut in eight years but said it could reduce them again later this year if inflation continues to ease.

Riksbank said it left its policy rate at 3.75 percent, arguing its monetary policy "should be adjusted gradually" after cutting it in May.

The bank said "economic activity is weak" and inflation has continued to fall closer to its target of two percent.

"If inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year," Riksbank said.

The bank's favoured measurement of inflation, adjusted for fixed interest rates (CPIF), reached 2.3 percent last month.

"The Riksbank's decision to leave rates unchanged was as expected and does not suggest that policymakers are regretting their decision to cut in May," said Jack Allen-Reynolds, an economist at London-based research firm Capital Economics.

"We expect the Bank to cut rates three times this year," he added.