When the Danish Central Bank cut rates precisely a week ago [2], going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark's monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!
From the release [3]:
Effective from 30 January 2015, Danmarks Nationalbank's interest rate on certificates of deposit is reduced by 0.15 percentage point to -0.50 per cent. The lending rate, the discount rate and the current account rate are unchanged.
The interest rate reduction follows Danmarks Nationalbank's purchase of foreign exchange in the market.
Danmarks Nationalbank's interest rates are:
Lending rate: 0.05 per cent
Certificate of deposit rate: -0.50 per cent
Current account rate: 0.00 per cent
Discount rate: 0.00 per cent.
Ironically, all this will achieve is delay the Peg breach by a few weeks. If anything, the Danish central bank is merely confirming that while it hasn't sounded an all out retreat from currency wars, like the Swiss and Singapore banks did recently, it is in furious retreat and it is only a matter 0f time at this point.