Danmarks Nationalbank follows the ECB and lowers interest rates
As expected, the National Bank follows the European Central Bank (ECB) and lowers its interest rates by 0.25 percentage points.
This is stated by the Nationalbank in a press release.
This means that the leading interest rate – the certificate of deposit rate – is now 1.60 percent, while the lending rate is 1.75 percent.
The certificate of deposit interest rate determines how much interest mortgage and banking institutions receive by purchasing certificates of deposit from Danmarks Nationalbank.
This can therefore also have an impact on the interest rate that customers at the various institutions can receive.
For comparison, the certificate of deposit interest rate was 3.6 percent almost exactly a year ago.
Earlier Thursday, the ECB lowered its deposit rate by 0.25 percentage points to two percent. This is the eighth rate cut in a year.
The National Bank usually follows suit when the ECB changes interest rates. This is because the krone is tied to the euro as a result of the fixed exchange rate policy, and therefore interest rates have to follow suit.
If this does not happen, it could put pressure on the krone, writes Jeppe Juul Borre, chief economist at Arbejdernes Landsbank, in a comment.
Good news for homeowners with short-term interest rates
He also points out that the Danish interest rate cut may be particularly good news for homeowners with short-term fixed-rate mortgages.
“Around 300,000 homeowners have F-kort loans, which have a semi-annual interest rate, and most of them experienced a decrease in interest rates at the turn of the year of around one percentage point.”
“And an additional 0.60 percentage points may be in store for most homeowners when the interest rate is next set at the end of June.”
This could lead to savings of up to 400 kroner per month after tax per million borrowed.
The ECB and thus also the Nationalbank implemented a large number of interest rate increases in 2022 and 2023 in an attempt to rein in sky-high inflation.
When interest rates are raised, it becomes more expensive to borrow money from the bank. All other things being equal, this will cause consumption – and thus inflation – to fall.
The ECB’s deposit rate peaked at four percent, while it was 3.6 percent at Danmarks Nationalbank.
Ritzau
