We expect the European Central Bank (ECB) to keep policy rates unchanged at Thursday’s meeting. The EUR/DKK has been relatively stable below the central rate since the 24 January independent rate increase by Danmarks Nationalbank (DN).
DN has not needed to intervene in the FX markets to support the DKK over the past four months - as a rule of thumb it takes around DKK10-20bn of interventions before an independent rate hike.
Hence, a new independent Danish rate hike is not on the cards. We expect the DN to remain quiet on Thursday if the ECB keeps rates unchanged.
In the unlikely scenario that the ECB cuts the refinancing rate by another 25bp, we would expect DN to cut the lending rate by 10bp to 0.10%.
On April 10, 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.'
In the more unlikely scenario where the ECB cuts both the refinancing and deposit rates by 25bp, we expect the DN to lower the lending rate by 10bp to 0.10% and the rate on certificates of deposit by 25bp to -0.35%.
To Read the Entire Report Please Click on the pdf File Below.
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DKK: Nationalbanken Preview - June 4, 2013
Published 06/04/2013, 08:50 AM
Updated 05/14/2017, 06:45 AM
DKK: Nationalbanken Preview - June 4, 2013
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