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The surge in inflation in 2021-22 reflects the covid-19 pandemic and Rus-sia’s war in Ukraine as well as the associated policy responses. In 2023-24, at least three factors are likely to drive inflation: (a) more stable energy prices, (b) an expected slowdown in aggregate demand growth caused in part by tighter monetary policy, and (c) improving supply chains.

​​A government budget surplus reduced central government debt by approximately kr. 115 billion to kr. 323 billion at the end of 2022, equal to just under 12 per cent of GDP. Rising interest rate levels in 2022 meant that the average yield to maturity on nominal government bonds issued in 2022 was 1.13 per cent p.a., which is the highest level since 2013. However, the rising interest rates do not affect interest costs on that part of the central government’s nominal debt which has already been raised.​

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​Danmarks Nationalbank raises the current-account rate, the rate of interest on certificates of deposit, the lending rate and the discount rate by 0.35 percentage point with effect from 3 February 2023.

​In January 2023, the foreign-exchange reserve increased by kr. 16.5 billion to kr. 594.6 billion. For settlement in January, Danmarks Nationalbank's net purchase of foreign exchange due to intervention in the foreign-exchange market amounted to kr. 13.2 billion.

Rising mortgage rates have led to high mortgage refinancing activity in Denmark. The Danish mortgage system has a match-funding principle, and rising rates allow fixed-rate mortgage borrowers to buy back their mortgages at a discount. 62 per cent of this discount was used to reduce debt, while 38 per cent was cashed out. When cashing out, homeowners may become more sensitive to adverse developments in interest rates and house prices.

Many Danish homeowners have used interest rate increases to refinance their mortgages. When interest rates rise, the price of fixed-rate mortgage bonds falls, enabling homeowners to repay their loans at a price below the price of the loan when it was taken out. This means that homeowners can realise a net wealth gain, which they can use for various purposes. Danmarks Nationalbank’s economists have conducted a study of how these homeowners have spent their net wealth gain on. The study showed that most people have reduced their bank or mortgage debt. Others have chosen to extract cash to support consumption or savings at a time when rising interest rates and high inflation generally dampen economic activity.

The total card turnover in 2022 reached kr. 642 billion, which is 8 per cent larger than in 2021. The industries that were hit hardest by corona restrictions are now well on their way to or above their level from 2019, which is the most recent year without corona restrictions.