* Riksbank's Ingves says supports July rate cut, loans
* Ingves says could issue more fixed-rate loans
* Says should be prepared to use other measures if needed
(Adds background, comments)
STOCKHOLM, July 16 (Reuters) - Swedish Central Bank Governor Stefan Ingves said on Thursday the Riksbank could lend more to banks at fixed interest rates and may even need to use additional measures to boost the economy.
Ingves also backed the central bank's decision at its July 1 meeting, which he did not attend due to illness, to cut its key interest rate by 25 basis points to 0.25 percent to counteract the worst economic downturn since the 1940s.
He added that the central bank's decision to offer banks 100 billion Swedish crowns ($12.8 billion) to boost lending and make monetary policy more effective was an important one, but that more action may be necessary.
"Lending at a fixed interest rate is a measure that may be repeated if necessary. However, the Riksbank also needs to be prepared to use other instruments that can contribute to an expansionary monetary policy," he said.
The central bank forecast in July that Sweden's economy would contract 5.4 percent this year, worse than it had expected at its previous meeting in April, before returning to growth in 2010.
At the same time, the central bank said there were positive signs that the worst of the global crisis had passed, not least in the financial markets.
Deputy Governor Lars Svensson, however, believed the Riksbank should do more to boost growth. He advocated cutting rates to zero percent. He said that this would not hurt financial markets.
"The most important lesson is not to withdraw expansionary monetary and fiscal policies too soon," he said.
Deputy Governor Barbro Wickman-Parak supported the cut to 0.25 percent, though she said that had conditions been normal, she would not have done so.
"However, given the strained economic situation Ms Wickman-Parak said that it can do no harm to reduce the repo rate even though the impact on the real economy will be limited, especially as there is no risk of inflation in the short-term perspective," the minutes said. (Editing by Toby Chopra)