Denmark Rates, Economy Interlinked

Denmark’s deeply negative interest rates will rise as the economy recovers, central bank governor Lars Rohde said, Reuters reported. Denmark’s currently has interest rates of minus 0.75% and keeps its currency, the crown, close to 7.460 crowns per euro. “Higher interest rates are likely to come with a robustly improving macro environment,” Rohde said in a speech at an economics conference in London. He added that the central bank did not currently see a “speculative housing bubble” anywhere in Denmark, though he added 10% a year rises in prices could not go on indefinitely without causing problems. Under the European Union’s Exchange Rate Mechanism, Denmark must keep the crown within 2.25% of 7.460 crowns per euro, although in practice it has not moved more than 0.5% either way. Last month Denmark’s central bank raised its economic growth forecasts for 2017 and 2018 and has warned there were some risks of the economy overheating.