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What does ‘historic’ interest rate hike mean for Denmark?

The Nationalbank, Denmark’s central bank, has increased interest rates by 0.75 percent to 0.65 percent.

What does ‘historic’ interest rate hike mean for Denmark?
The headquarters of Denmark's central bank Nationalbanken in Copenhagen. Photo: Philip Davali/Ritzau Scanpix

The Danish central bank confirmed the decision in a statement on Thursday following a similar decision by the European Central Bank (ECB), the central bank for the eurozone.

The increase represents the highest raise in interest rates by the Nationalbank since 1998 and means that interest goes above 0 percent for the first time since 2014. Prior to Thursday’s announcement, Danish central bank interest rates were -0.10 percent.

The Danish increase follows directly from the similar decision made by the ECB, in keeping with Denmark’s monetary policy of parity with the euro, keeping the value of 1 euro at 7.50 kroner. Interest rates must be adjusted concurrently to ensure this.

In general, the interest rate changes seen across Europe on Thursday are of historic proportion.

The accelerating pace of inflation pushed the ECB to reach for the biggest interest rate rise in its history, of 75 basis points, in the hope of taming runaway price rises, news wire AFP reported.

Inflation estimates were meanwhile also raised again by the ECB as the eurozone faces a painful surge in energy prices in the wake of the Russian invasion of Ukraine.

READ ALSO: How much will Danish energy bills go up this winter?

The ECB warned on Thursday that inflation was “far too high” and likely to stay above target for “an extended period” as it made its biggest ever interest rate hike, AFP writes.    

It lifted its inflation outlook for 2022 to 8.1 percent from 6.8 percent previously forecast, and for 2023 it raised the figure to 5.5 percent from 3.5 percent. Consumer price growth is then expected to ease to 2.3 percent in 2024, close to its previous forecast of 2.1 percent.

In Denmark, an increase in interest rates has a similar objective of taking the momentum out of inflation.

That is broadly because higher interest makes it more expensive to loan money and more attractive to save. This can reduce consumer spending and check spiralling prices.

“It’s necessary for the central banks to now show that they will not permit inflation to stay high. That way they can hopefully prevent that an expectation of high inflation can take hold and become self-fulfilling,” Danske Bank senior economist Las Olsen told news wire Ritzau in a written comment.

Higher interest rates are not surprising in the current climate, Sydbank senior economist Søren Kristensen said.

“The interest rate increase today means slightly higher interests [for bank customers] but was broadly calculated for. It is therefore more of a way of cementing the increases in interest rates since the New Year,” Kristensen told Ritzau.

“However, it will have a large significance for the Danish economy and especially the housing market. Here, we expect that increasing interest this autumn will bolster the drops in price we are already seeing,” he said.

Accountholders at Nordea, one of the largest banks operating in Denmark, will see the interest rates on some of their savings flip into the black on September 20th, the bank said following the Nationalbank announcement. 

A handful of other Danish banks scrapped negative interest rates earlier this year, among them Nykredit, Arbejdernes Landsbank and Saxo Bank.

READ ALSO: Denmark’s banks raise interest rates but many still remain negative

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Four websites and apps for buying and selling second hand in Denmark

What's the best place to pick up vintage clothes, a coffee table or a bicycle at a bargain second-hand price online in Denmark? Here are four options.

Four websites and apps for buying and selling second hand in Denmark

With no Danish edition of eBay, there’s not a single platform which dominates the market when it comes to finding second-hand items or selling on things to a new home.

The four apps and websites listed below can all be used to buy second-hand items and list your own for sale. Some might be more suited for specific purposes or types of item than others.

Reshopper

If you’re looking for a baby jogger, jumpsuit (flyvedragt) or Peppa Pig toys, this is probably your best option. The Reshopper app includes listings by a good number of private sellers and can be sorted by location, meaning it’s often possible to find what you need locally. Some sellers offer postage and in some cases you might need to collect the item in person. If you’re lucky, the seller can drop off the item.

Prices are reasonable – I would say they are more than competitive compared to increasingly expensive charity and second-hand shops, particularly in the Copenhagen area.

Sellers can choose whether to offer shipping and have payment processed through the app, in other cases payment is arranged between the buyer and seller. A messaging function allows arrangements to be made.

There are “Mom” and “Home” sections on the app, but it’s for baby and kids’ wares that Reshopper really comes into its own.

I managed to pick up a baby jogger for 450 kroner from a private seller on the app a couple of years ago. I’ve used it frequently since and it has certainly proved worth the money, only needing a couple of new inner tubes during that time.

In addition to downloading the app, I’d recommend following Reshopper on Instagram. They have recently started opening pop-up stores where you can find great deals on clothing, toys and equipment for kids. This is not restricted to used items – you might find new products that have been discarded because they are from previous seasons or have been returned to manufacturers.

Den Blå Avis (DBA)

The legacy option for buying second-hand, DBA started life as a classified ads paper many years ago and can now be browsed as an app or website.

You can find anything on DBA, from sofas to PC components to cars. I bought my car through an ad on the site and, like my baby jogger, I’m happy to say it’s been one of my better purchases and is still going strong two years down the line.

DBA is probably the closest equivalent Denmark has to eBay but should be used with caution because it doesn’t offer the same level of protection to buyers. Many sales still involve transferring money directly to sellers (often using the MobilePay payment app) and trusting them to ship the item. This might go well most of the time but there are scammers out there.

One way to protect yourself is to make sure you only buy from sellers who have verified themselves using Denmark’s MitID digital ID system, a function DBA introduced in recent years.

Unlike eBay, you don’t enter auctions for items on DBA but you can send messages to sellers whose items interest you.

Facebook Marketplace

If you’re on Facebook, you’ve probably come across the Marketplace platform. Now popular in many countries including Denmark, Marketplace has challenged and arguably overtaken DBA as the spot most people sell their unwanted items.

Because it’s populated with sellers keen to shift their goods – and possibly less concerned about the price they receive for them – it can be a good place to pick up a bargain. This is something which is harder to come by than it used to be in physical second-hand stores.

Marketplace can be found on the Facebook app or via this link.

Trendsales

As the name suggests, Trendsales is a clothing-focused platform and is in fact the largest Danish marketplace for used clothing as well as lifestyle items.

You’ll find all sorts of clothing there – it’s not limited to designer or fashion items, so you should be able to pick up a comfortable hoodie from H&M or look for a vintage t-shirt and be in luck.

The interface is easy on the eye and user-friendly, and the prices often surprisingly reasonable. Sellers can choose delivery options and may or may not accept in-person collection.

READ ALSO: How to save money as a student in Denmark

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