Loan costs in Denmark cut following ECB, Danmarks Nationalbank action
Jyske Bank is the first of Denmark’s bigger banks to cut rates on certain loans in response to yesterday’s action by the country’s central bank, Danmarks Nationalbank.
The central bank cited the action of the European Central Bank (ECB) in its decision to cut its lending rate by 35 basis points to 1.20%. This is the first time the Danish lending rate is lower than that offered by the ECB – which yesterday cut its key refinancing rate by 0.25% to 1.25%.
“The interest rate reduction is a consequence of the reduction by the European Central Bank of its rate on the main refinancing operations by 0.25 percentage point to 1.25 per cent. Furthermore Danmarks Nationalbank has purchased foreign exchange in the market,” it said in its announcement yesterday.
Cuts also hit other rates provided by the bank: certificates of deposit now pay 0.65%, its current account rate is 0.55%, and the discount rate 1%.
Jyske in turn said it would cut interest rates on certain products, but not all lending rates would be affected. The bank said this was as a result of the EU’s increased capital requirements on banks, and the affects this was having on revenue requirements.