We expect the European Central Bank (ECB) to lower the refinancing rate by 25bp to 0.50% at Thursday's policy meeting. In this case, we expect Danmarks Nationalbank (DN) to lower the lending rate by 15-25bp from the current 0.30%.
On April 10, the DN stated 'With low monetary policy interest rates the room for further reduction of Danmarks Nationalbank's lending rate is limited. The lending rate will remain positive.'
The reasonably stable EUR/DKK, and a lending rate close to zero indicate that the lending rate may not fully track a refinancing rate cut.
If the ECB decides to leave policy rates unchanged, we do not expect any reaction from the DN, as the EUR/DKK has been reasonably stable below the central rate and the DN is unlikely to intervene in the currency market.
In the more unlikely scenario where the ECB cuts both the refinancing and deposit rates by 25bp, we would expect the DN to lower the lending rate by 15-25bp and the rate on certificates of deposit by 25bp.
To Read the Entire Report Please Click on the pdf File Below.
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DKK: Nationalbanken Preview And DKK Update
Published 04/30/2013, 08:36 AM
Updated 05/14/2017, 06:45 AM
DKK: Nationalbanken Preview And DKK Update
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