ECB cuts rates for third time in 2023

The European Central Bank (ECB) reduced its leading interest rate by 0.25 percentage points to 3.25 percent, according to a press release on Thursday afternoon. This cut was anticipated following reductions in both June and September, despite significantly higher rates than just a few years prior. In 2022, the record-low rate was -0.50 percent, but inflation control measures following Russia’s invasion of Ukraine had pushed it to 4 percent. Jeppe Juul Borre from Arbejdernes Landsbank expressed optimism for homeowners with variable-rate mortgages due to the upcoming lower rates, anticipating additional rate decreases into 2025 predicted by Allan Sørensen from Dansk Industri (DI). The Nationalbanken, Denmark’s central bank, is expected to follow ECB’s example due to Denmark’s fixed exchange rate policy with the euro. The new rate reduction is effective from October 23.