© Stocksak. (c) Stocksak. The Danish central bank, also known by Danish Nationalbank, can be seen in Copenhagen on January 22, 2015. REUTERS/Fabian Bimmer/File photo
COPENHAGEN, (Stocksak), – Denmark’s central banks raised its key interest rates by 0.60 percentage points on Thursday to 1.25%. This is after a rate hike earlier that day by the European Central Bank.
Denmark, which was the first country worldwide to impose negative rates for 2012, ended a decade-long experiment in negative interest rates when it moved its key rate into positive territory.
“The European Central Bank’s main monetary rate has increased, resulting in an increase in interest rates,” the central bank stated in a statement.
On Thursday, the ECB increased its benchmark deposit rate by 75 basis point to 1.5% and signaled further increases.
Denmark’s main interest rate has been raised to its highest level since August 2009 by the Danish move.
The Danish central bank has a unique mandate. It is independent of other central banks. This includes currency interventions and rate moves.
Normally, the central banks follows the ECB’s rate movements, but this time it raised rates slightly, Las Olsen, Danske Bank chief economist, said in a note.
Olsen said that they chose a slightly lower interest rate increase this time because they want a slightly weaker crown.
After the central bank’s move the crown currency suffered a slight decline and traded at 7.44 crowns per euro at 1513 GMT.
With effect from Oct. 28, the current account rate (which is the benchmark rate) and the certificate of deposits rate were each increased by 60 basis point to 1.25% from 0.65%. The lending rate was also increased by 60 basis points, to 1.4% from 0.8%.