Denmark’s central bank reduced its key interest rate by 25 basis points, matching its euro-area counterpart, to defend the krone’s peg to the common currency.

Looking further forward, the ECB is forecasting an inflation rate of just 1.6 per cent for 2026, meaning it would undershoot its medium-term inflation target of 2 per cent.

The European Central Bank cut interest rates as expected on Thursday and said it believed it was now well-positioned to cope with global economic uncertainty, as market bets grew on a summer pause in its year-long easing cycle.