National Bank of Denmark Cuts Lending Rate to 3.75% from 4.25%

December 19, 2008

Denmark’s central bank took advantage of the krone’s better tone to reduce the spread between its benchmark rate, now 3.75%, and the ECB’s refinancing rate, which is presently at 2.50%. See the explanation by clicking here. The new spread between the Danish and Euroland rates of 125 basis points remains a full percentage point higher than the historically normal spread of 25 basis point. Denmark’s central bank implemented unilateral rate hikes of 10 basis points last May 16th, 40 bps last October 7, and 50 bps to a peak of 5.5% on October 24th, and it also did not match the ECB’s 50-bp rate cut on October 8th. The ECB’s subsequent cuts on November 6th and December 4th were matched in full.



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