(Bloomberg) -- Denmark’s central bank is likely to follow its European counterpart with a quarter-point interest-rate cut later on Thursday, economists said.
All five economists polled by Bloomberg News expect Nationalbanken to lower its current account rate to 2.85% from 3.1% at 5 p.m. in Copenhagen, in what would be the Nordic nation’s third reduction of borrowing costs this year.
The Danish central bank, whose mandate is to uphold the krone’s peg to the euro, typically matches the ECB’s rate decisions, though it may diverge if the krone becomes too weak or strong.
Despite recent fluctuations, the krone is trading close to its central parity rate, and Nationalbanken has not intervened in the currency market in prior months, economists said. This makes it likely that the central bank will maintain its current spread of 40 basis points below the euro-area’s key deposit rate.
The success of Novo Nordisk A/S and other Danish drugmakers — fueling the currency’s strength via booming exports — is widely seen as the key factor forcing Denmark to keep interest rates lower than in the euro area. At the same time, Novo has also had a temporary opposite effect last year when its large dividend payout helped weaken the krone to a three-year low.
“The krone has experienced greater fluctuations than usual against the euro in the past few weeks, but this should not worry the Danish central bank, and we therefore expect it to mirror the ECB,” Jens Naervig Pedersen, a senior analyst at Danske Bank A/S, said.
Aside from Danske’s Naervig Pedersen, the following economists participated in the poll: Anton Thorell Caroe of Arbejdernes Landsbank A/S, Jan Storup Nielsen of Nordea Bank Abp, Palle Sorensen of Nykredit A/S and Soren Kristensen of Sydbank A/S.
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