Denmark’s central bank, Nationalbanken, is anticipated to raise its benchmark interest rate by 25 basis points, in accordance with the European Central Bank (ECB), economists forecasted on Thursday. The projected increase would elevate the current account rate from 3.35% to 3.6%.
Nationalbanken, which operates without a fixed meeting schedule and pegs its krone to the euro, has a history of echoing ECB’s monetary policy decisions. Over the past 14 months, the Danish bank has mirrored every one of ECB’s nine rate hikes. On two occasions, Nationalbanken opted for smaller rate increases than the ECB in an effort to depreciate the krone.
However, recent developments suggest that the krone has already depreciated and is now trading around its central parity to the euro. This indicates that there is currently no necessity for Nationalbanken to diverge from ECB’s decisions to manage its currency value.
Analysts noted that Nationalbanken has not intervened in the currency market for a significant period, signifying a lack of pressure on the krone. The forthcoming rate hike is expected to occur at 17:00 Copenhagen time.
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