Denmark’s central bank followed in the footsteps of the European Central Bank on Thursday cut its key deposit rate to 0.75%.
This brings the Danish basic rate to historic lows on par with Swiss rates. Danish lenders are already offering mortgages at negative rates.
The triple-A-rated Danish economy was among the first to introduce negative interest rates in 2012, along with Sweden.
Sweden’s central bank (Riksbank) was the first among developed economies to introduce negative interest rates during the crisis but is now moving in the opposite to Denmark’s direction, holding on to its benchmark negative interest rate of -0.25% on Wednesday.
The ECB’s main deposit rate is currently at-0.5%. The Danish Central Bank goes lower to avoid rapid appreciation of the Krona that would make Danish products less competitive. Analysts expect that the Danish basic rate may drop to minus 0,85% by the end of the year.