Denmark cuts interest rate

Denmark's central bank said Thursday it would cut its key interest rate by 0.10 point to 1.55 percent effective June 8, just hours after the European Central Bank kept its rates unchanged. Denmark, an EU member but not part of the euro single currency zone, has a fixed exchange rate policy with the euro and tends to follow the ECB's lead on rate changes, rarely making unilateral moves.
"The reduction is a consequence of purchases of foreign exchange in the market," the Danish central bank said in a statement. Demand for Danish kroner has increased recently and the central bank had to sell kroner to keep it within the allowed 2.25 percent range of the fixed exchange rate. Denmark has gradually reduced its interest rates since a peak of 5.5 percent at the end of October. The central bank also lowered by 0.2 points the certificates of deposit rate to 1.45 percent and the current account rate to 1.20 percent.