Denmark continues to raise interest rates

I had posted a while back that Denmark seems to be the only Central Bank to have raised interest rates. I had also said in the same post that may be Denmark would have to undo its decision soon.

However, it continues to raise rates to support its currency (Danish Krone). Basically, Denmark is raising rates to prevent capital outflows and depreciation of its currency. Earlier, the rates in Denmark and Euroarea was at same levels leading to capital outflows and depreciation of the currency. Now ECB has lowered rates and is expected to lower further (same would be the case for BoE, Sweden, Switzerland etc). So the interest rates in Denmark would be much higher compared to other economies going ahead. Let’s see for how long it continues to maintain higher rates.

Interesting times surely for the Central Banker.

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7 Responses to “Denmark continues to raise interest rates”

  1. Interest Rates » Denmark continues to raise interest rates Says:

    […] Read the rest of this great post here […]

  2. Iceland does a reversal- raises rates by 600 bps to 18%! « Mostly Economics Says:

    […] does a reversal- raises rates by 600 bps to 18%! It is not just Denmark but Iceland too. Central Bank of Iceland has raised rates by 600 bps from 12%to 18%. However, […]

  3. Interest Rates » Denmark continues to raise interest rates « Mostly Economics Says:

    […] Read the rest of this great post here […]

  4. Monetary Policy Transmission channels and role of Central bank « Mostly Economics Says:

    […] concern over ongoing frequent and dramatic rate cuts by central banks world over (exceptions are Denmark and Iceland). The latest in cutting is Australia by 75 bps (it cut by 100 bps in September 2008!). […]

  5. Denmark finally cuts rates as well « Mostly Economics Says:

    […] finally cuts rates as well As I said earlier, Denmark Central Bank finally cuts rates as well. The press release is here. It has reduced rates […]

  6. What if Denmark was part of Europe? « Mostly Economics Says:

    […] was capital outflow from Denamrk and the Central Bank was forced to raise rates. But nothing happened initially as ECB rates were […]

  7. The European Debt Crisis – from a Danish Perspective « Mostly Economics Says:

    […] led to problem in the crisis as when ECB was cutting rates, Denmark Central Bank was raising rates to prevent capital outflows (fixed exchange rates are messy most of the time). This prompted […]

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