Banking
Denmark’s central bank cuts key interest rate to 2.85%, mirroring ECB
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COPENHAGEN (Reuters) – Denmark’s central bank cut its key policy interest rate by 25 basis points to 2.85% on Thursday as expected, following the European Central Bank’s decision earlier in the day to reduce euro zone rates.
The interest rate reduction is a consequence of the reduction by the European Central Bank of its main monetary policy rate, the deposit facility rate, by 0.25 percentage point,” Danmarks Nationalbank said in a statement.
Thereby, the monetary policy spread vis-á-vis the euro area will remain unchanged,” it added.
The primary mandate of the Danish central bank is to keep the crown currency stable versus the euro, an objective it upholds through currency interventions and interest rate moves.
Denmark’s benchmark current account interest rate and the certificate of deposit rate were each cut by 25 basis points to 2.85% from 3.10%, while the so-called lending rate was cut by 25 basis points to 3% from 3.25%.
The ECB earlier lowered its deposit rate by 25 basis points to 3.25%, its third cut this year, pointing out that inflation in the euro zone is now increasingly under control and the economic outlook has worsened.
(Reporting by Stine Jacobsen, editing by Jacob Gronholt-Pedersen)
A central bank is a financial institution that manages a country's currency, money supply, and interest rates. It oversees the banking system and implements monetary policy.
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic objectives like controlling inflation and stabilizing currency.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the amount borrowed or saved, typically over a year.
The European Central Bank (ECB) is the central bank for the eurozone, responsible for monetary policy, maintaining price stability, and overseeing the banking system within the euro area.
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