COPENHAGEN, July 21 Reuters  Denmark39;s central bank raised its key interest rate by 0.5 percentage points to minus 0.1 on Thursday, following a rate hike earlier in the day by the European Central Bank ECB.

The interest rate increase is a consequence of the increase by the European Central Bank of its main monetary policy rate, the central bank said in a statement.

The monetary policy spread to the euro zone will remain unchanged, it added.

Unlike most central banks, Denmark does not adjust rates to control inflation. Its sole mandate is to keep the crown currency within a narrow exchange rate band against the euro, an objective it upholds through currency interventions and interest rate moves.

The move could also help dampen the country39;s overheated economy, characterised by low unemployment, high private consumption and a strong housing market.

This will have great significance for the Danish economy and especially the housing market, where we expect higher interest rates to result in falling prices during the autumn, said Soren Kristensen, chief economist at Sydbank.

Denmark39;s largest bank, Danske Bank, said it would raise the variable interest rate on personal and business customer deposits by 50 basis points as a consequence of the central bank move.

Earlier on Thursday, the ECB raised its benchmark deposit rate by 50 basis points to zero percent, as concerns about runaway inflation trumped worries about growth, even while the euro zone economy is…