* Riksbank leaves repo rate unchanged at 1.25 pct * Says next likely rate move now a cut rather than a hike * Signals may reduce borrowing costs later this year * Swedish economy feeling more impact from euro zone crisis (Adds details, analysts) By Patrick Lannin and Daniel Dickson STOCKHOLM, Oct 25 (Reuters) - Sweden's central bank said on Thursday it was likely to cut interest rates this year, in a clear acknowledgement of the spreading impact of the euro zone crisis on the country's once high-flying economy. The Riksbank left its key interest rate unchanged at 1.25 percent. But it ditched a forecast made as recently as last month that its next rate move would be a hike and said it was cutting the likely path of future interest rates to stimulate growth. "It is now more probable that the repo rate will be cut rather than being raised during the winter," the bank said in a statement. Analysts said following the comments that they expected a rate cut this year, and the country's crown currency fell to a 3-1/2-month low against the euro. Sweden withstood the euro zone debt crisis well in the first half of 2012, but growth faded along with demand for the exports that account for half of the country's economic output - and 50 percent of which go to Europe. Key exporters like Volvo, SKF and mining firm Sandvik have all said they are expecting a drop in demand for their products. The central bank cut its forecast for GDP growth this year to 0.9 percent from 1.5 percent, and trimmed it for 2013 to 1.8 percent from 1.9 percent. 'DONE DEAL' The decision to hold rates had been widely expected, especially after central bank governor Stefan Ingves said last week that low rates were encouraging people to take on too much debt. The bank's six-member executive board said it decided to cut the path of forecast interest rates "to stimulate the economy so that inflation rises towards the target of 2 per cent". Two members of the board disagreed and wanted a rate cut now. The board next meets on rates on Dec. 17, with the decision announced the following day. "We believe it is a done deal that they will cut in December," said Nordea economist Torbjorn Isaksson. "We believe they will stop at 1 percent, but there is certainly a (possibility) that they will go below 1 percent with the repo rate." The Riksbank noted that unemployment had risen and that the labour market was expected to recover more slowly than previously thought. Inflation, at 0.4 percent in September, remained low, it said. "A continued low repo rate and reduced unease regarding economic developments in Europe are expected to lead to economic activity in Sweden strengthening, wages increasing at a faster pace and inflation rising," it said. The bank last cut the repo rate in September, easing by 25 basis points to 1.25 percent. It said then the rate would be unchanged until sometime next year, when it would rise. In its new statement, it said the eventual rise in rates would come later than expected. "There is a quite considerable downward adjustment of the (rate) path all the way through, by as much as 50 basis points at its far end," said Swedbank analyst Knut Hallberg. "We think they will cut in December and raise in the final quarter of 2013," said Anna Raman at Nykredit. In a nod to Ingves's concerns, the bank said its forecasts were expected to go "hand in hand" with households' debt ratios not rising. Deputy Governor Karolina Ekholm had wanted the repo rate to be cut to 1.0 percent on Thursday and then lowered further to 0.75 percent, where it would stay until the end of 2013. Deputy Governor Lars Svensson wanted the repo rate cut to be cut to 0.75 per cent and then a rate path that stayed at 0.50 percent from the first quarter of 2013 through the first quarter of 2014, and then rises later to 1.5 percent. (Reporting by Patrick Lannin, additional reporting by Niklas Pollard, Veronica Ek, Johan Ahlander and Johan Sennero; Editing by Alistair Scrutton, John Stonestreet)

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