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UPDATE 1-Danish cbank silent on rates, confounding expectations for a cut
February 12, 2015 / 3:37 PM / 3 years ago

UPDATE 1-Danish cbank silent on rates, confounding expectations for a cut

(Adds analyst, Swedish move, background)

COPENHAGEN, Feb 12 (Reuters) - Denmark’s central bank issued no statement on its monetary policy at 1500 GMT on Thursday, the usual time when it announces rate changes, confounding many analysts’ expectation for a fifth cut in four weeks.

The central bank cut its certificate of deposit rate by 15 basis points three times in January and by 25 basis points last week to keep its crown currency within a narrow range to the euro. At -0.75 percent, the Danish deposit rate is one of the lowest in the world, level to that of Switzerland.

Analysts had expected a cut of as much as 50 basis points, estimating the central bank spent some 70 billion Danish crowns ($11 billion) intervening in foreign currency markets so far this month. It had already spent 106 billion crowns in January.

Danske Bank Chief Analyst Arne Lohmann Rasmussen, said the lack of a cut on Thursday “could be interpreted as the central bank emphasizing intervention in the forex market more than rate cuts from now on”.

“A problem in lowering the rates further is that it puts stress on the Danish financial sector as we do not push negative rates on to customers,” he said.

Commercial banks have to pay to keep some of their cash necessary for liquidity with the central bank. With the current deposits of over 300 billion Danish crowns and a negative rate of -0.5 percent, the cost amounts to 1.5 billion crowns.

Sweden surprised markets earlier on Thursday by cutting its rates into negative territory and announcing a bond-buying scheme; a quantitative easing policy that mirrors the European Central Bank’s programme. ($1 = 6.5387 Danish crowns) (Reporting by Sabina Zawadzki and Teis Jensen; Editing by Balazs Koranyi)

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