2012.05.31 16:38:49 Danish Central Bank Cuts Lending Rate To Defend Strong Krone

COPENHAGEN (Dow Jones)--The Danish central bank Thursday cut its key lending rate by 15 basis points to defend the Danish krone, as the euro zone debt crisis continues to make investors flood to the small Nordic country. The cut is bank's second policy move in the space of a week to defend the currency, which is pegged to the euro. With the most recent rate reduction, the key lending rate has reached an all-time low 0.45%, 55 basis points below the comparable European Central Bank refinancing rate. Nationalbanken said in a statement the move followed currency purchases by the bank in the market. Nationalbanken also lowered its current account rate to zero, its certificates of deposit rate to 0.05% and its discount rate 50 basis points to 0.25%. In a statement, the central bank for the first time cautioned that its rates may eventually turn negative in the coming days or months, if the upward pressure on the krone continues. "Nationalbanken has the instruments to handle potential negative interest rates," it said. -By Flemming Emil Hansen, Dow Jones Newswires; +45 33 12 44 88; flemming.hansen@dowjones.com (END) Dow Jones Newswires May 31, 2012 10:38 ET (14:38 GMT)