speech ultra low interest rates from the perspective of a central banker, opening remarks by governor lars rohde at the conference'long run outlook for interest rates ', 1 september 2021. check against delivery good morning. in my remarks today, i will explore the topic of low interest rates from a danish perspective. i hope that this will set the scene for today's discussions in what will surely be a very fruitful conference. the persistent decline in a wide set of interest rates is one of the most important topics in modern macroeconomics and finance. it is driven by a host of underlying factors operating at a global level, and it has implications for households, firms and financial institutions of all shapes and sizes. the decline in interest rates is also affecting the scope for conducting economic policies. most obviously, it challenges the effectiveness of conventional monetary policy as policy rates have moved closer to their effective lower bound. but it also has implications for the conduct of fiscal policy as well as for the optimal deployment of macroprudential tools. the link between low interest rates and fiscal policy in denmark will be the topic for the panel discussion later this morning. as governor of danmarks nationalbank, the causes and consequences of very low interest rates is something that has been high on the agenda for at least a decade. in july 2012 we were the first central bank to introduce negative policy rates. and in early 2015 we reduced our key policy rate to - 0. 75 per cent. this means that together with the swiss national bank, we are the central bank that has operated with the lowest level of the key policy rate. while we have been at the forefront when it comes to low and negative interest rates, we are clearly part of an international trend. policy rates are currently negative in denmark, switzerland, japan and the euro area. and in most other advanced economies, they are close to zero. this did page 1 of 7 not happen overnight. as you can see from this chart, policy rates have been trending downwards since the 1980s. chart 1 : policy rates have declined across the advanced economies the secular decline in interest rates is no coincidence. it reflects key underlying economic and financial developments. first, the underlying equilibrium real interest rate, or r * for short, has declined. this is the real rate of interest that balances savings and investments so that inflation remains stable. this chart shows estimates of r * for denmark, the united states as well as a group of advanced economies. chart 2 : low policy

jens thomsen : brief overview of the danish economy statement by mr jens thomsen, member of the board of governors of the national bank of denmark, at the meeting of the danish economic council, copenhagen, 30 november 2004. * * * the cyclical analysis of the chairmanship of the danish economic council is in line with other analyses : the danish economy is in an upswing, driven by strong growth in domestic demand. this contributes to bringing down unemployment and raising labour force participation. the latest national accounts figures indicate that growth is slowing down, but these figures are often revised significantly and thus uncertain. it goes without saying that it is prerequisite to danish economic development that the international cyclical scenario does not weaken markedly. danmarks nationalbank agrees with the chairmanship that fiscal relaxation is not required. fiscal policy must be formulated for the medium term, based on the 2010 plan. short - term fiscal adjustments tend to have unwanted effects. obviously, structural measures must be taken to keep the surplus on public finances at 1½ - 2½ per cent of gdp. here, the report points out that the lack of new employment - policy initiatives gives cause for concern. chapter 1. 4 ’ s discussion of wage competitiveness scarcely touches on the issue of productivity development. how can it be that danish wages have been rising faster than those of our competitors for a number of years and the effective krone rate has risen, while the employment level has been high, and has recently begun to rise again, and we have enjoyed a sound ( and rising ) surplus on the current account? this combination is worthy of a few comments, including the issue of productivity growth, even if it is not obvious what is cause and what is effect. as far as excise duties are concerned, it should be emphasised that some of these are highly sensitive to cross - border trading. therefore, changes in relative prices may have great consequences. the same applies to duties on pesticides. a ban on pesticides would be most effective if accompanied by a similar ban in our neighbouring countries. the proposal to introduce a tax allowance for maintenance and repair of one ’ s own home seems to conflict with the efforts to expand the tax base and reduce tax rates. the views advanced on the stability and growth pact are pertinent. clearly, the task is to increase the incentive to consolidate in the good times in order to avoid easing fiscal policy as seen in germany and france in 2001 and 2002. introduction of exceptions for certain expenses, such