Nationalbanken Lending Rate - Denmark Danish Central Bank interest rate

Nationalbanken

The Danish central bank is also called Danmarks Nationalbank or Nationalbanken. Although Denmark is a member of the European Union it still uses its own currency (the Danish krone) and not the euro. Because of this the Danish central bank has complete responsibility for its monetary policy. The most important objective of this policy is to safeguard the stability of the Danish krone. However, the close collaboration with the European Union means that the Danish central bank will generally only adjust its lending rate when the ECB changes the European interest rates (Refi Rate).

The inflation target of the Nationalbanken is in line with the ECB target for the Eurozone, max. 2% on a yearly basis (basis is the HICP, Harmonised Index of Consumer Prices).

Overview of the inflation rates in Denmark

The bank also supervises the national payment systems, the security of payments and the effectiveness and efficiency of the commercial banking system.

The Lending Rate

When reference is made to the Danish interest rate this often means the Nationalbanken Lending Rate. The most important objective of the monetary policy is to keep the value of the krone stable with respect to the euro. The market rates are strongly influenced by changes in the central bank's base rate, the Lending Rate or Udlansrente.

As already stated, the Danish central bank follows the path set by the ECB and the lending rate will be raised or lowered when the ECB changes the Refi Rate. In response to changes in the Lending Rate, commercial banks often also adjust their interest rates for consumer loans and mortgages and the interest paid on savings. A change in the Lending Rate often also leads to a change in the exchange rates of the Danish Krone.