Consumer confidence rises with rate cut

Consumer confidence in Denmark improved slightly in June, as the consumer confidence indicator rose to -4.4 from -5.5 in May, according to Statistics Denmark. The rate cut by the European Central Bank (ECB) in May from 4.00 to 3.75 percent, the first since 2019, likely contributed to this improvement. Higher interest rates had been diminishing Danes’ purchasing power and keeping consumer confidence low, explains Morten Granzau, vice-director at Danish Industry. The rate cut is seen as a relief and has increased optimism among consumers, potentially making loans for cars or home improvements cheaper. However, the overall economic view remains cautiously optimistic, as many people are still reluctant to spend. Chief analyst and private economist at Danske Bank, Louise Aggerstrøm Hansen, notes that despite real wage increases unheard of since the mid-1980s, the lingering negative financial experiences affect consumer behavior.