- ECB increased its key policy rate 25bp earlier today.Danmarks Nationalbank (DN) hiked its key policy rate 25bp to 3.60% after the
- We expect the rate hikes today to mark the end of the hiking cycle in the euro area and in Denmark and next move to be a rate cut in the summer of 2024.
- EUR/DKK trades close to the central rate and we thus look for DN to follow future ECB rate changes 1-to-1 and keep the policy rate spread at -0.40pp.
Danmarks Nationalbank (DN) just announced it hiked its key policy rate 25bp to 3.60%. The rate increase follows the decision by the ECB earlier today, which increased its policy rates 25bp to 4.00%.
We expect the hike today to mark an end to the hiking cycle. Although inflation remains elevated in the euro area, it will likely drop close to 2% next year, which should pave the way for interest rate cuts starting next summer.
EUR/DKK trades close to the central rate. We expect it to stay here and thus for DN to follow future interest rate changes from the ECB 1-to-1. I.e. we do not expect DN to make any unilateral adjustments of the policy rate spread, which is currently -0.40pp. It means we expect DN to keep its key policy rate unchanged at 3.60% until next summer
Source: FX STREET