COPENHAGEN: Denmark’s central bank cuts its deposit interest rate on Thursday following the European Central Bank’s announcement of stimulus measures to combat deflation in the stagnant euro-zone economy.
The bank cut the deposit rate by 0.15 percentage points to -0.35 percent but left its lending rate unchanged at 0.05 percent, in a move aimed at defending the Danish krone’s pegged exchange rate with the euro.
On Monday the deposit rate, which was cut to below zero in September for the first time since 2012, had already been reduced to -0.2 percent from -0.05 percent.
“The central bank is demonstrating that it is ready to set interest rates as low as is needed,” Nordea economist Helge Pedersen wrote on Twitter.
Analysts have speculated over the possibility of Denmark abandoning its policy of shadowing the euro in the wake of the turbulence caused by the ECB’s aggressive monetary policy and Switzerland removing its cap of 1.20 Francs to the European single currency last week.
