Denmark Hikes Key Interest Rate to 2.1 Percent

Borrowing money in Denmark is becoming more expensive for home buyers and shoppers.

The National Bank of Denmark raised its key interest rate by 0.25 percentage points.

The new certificates of deposit rate is now 2.1 percent.

This decision follows a similar move by the European Central Bank on Thursday.

The European Central Bank raised its rate from 2.25 to 2.5 percent.

Denmark maintains a fixed exchange rate policy against the euro.

Therefore, Danish officials usually copy European rate adjustments to support the krone.

Danish inflation does not require higher interest rates right now.

Allan Sørensen from the Confederation of Danish Industry explained this fact.

He said the move only aims to protect the weak Danish krone.

The central bank spent 5.6 billion Danish kroner in August supporting the currency.

The rate change directly influences local commercial banks in Denmark.

It affects interest rates on personal savings, loans, and housing mortgages.

Danish interest rates remain 0.4 percentage points lower than euro area rates.

This gap offers relative relief to Danish property owners.

This adjustment marks the second Danish rate increase this year after June.

Phillip Jagd from Sampension warned more hikes could happen this year.

Sune Malthe Thagaard from Totalkredit noted the central bank still has huge reserves.

The central bank holds almost 700 billion Danish kroner to protect the currency.