RTTNews - Thursday, the Denmark central bank reduced its key interest rate by 0.1 percentage points to 1.45%. The reduction will be effective from August 14.

The Danmarks Nationalbank also lowered interest rates on deposits by 0.1 percentage point to 1.35%. Similarly, the discount rate and the interest rate on the banks' current accounts slashed to 1.10%.

The central bank said the interest rate reduction was a consequence of purchasing foreign exchange in the market.

Earlier in the day, the Danske Bank had predicted an imminent 10 basis points reduction in the key interest rate. The main reasons for our expectation are that the Danish krone is very strong due to a
high carry and that we are currently seeing a solid inflow into DKK, the bank said in a note.

According to Danske Bank estimates, the Danish currency reserve currently stands in excess of DKK 350 billion. Under normal circumstances, the Danish central bank will change the lending rate if the currency reserve changes by around DKK 20 billion, the bank said.

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