20 September 2023
Inflation has eased, mainly because energy prices have fallen. However, Danmarks Nationalbank still expects high core inflation in the coming years, partly as a result of large wage increases. Therefore, tight economic policy is required.
"We are still not on target in terms of ensuring low and stable inflation in Denmark," says Governor Christian Kettel Thomsen.
Central banks have significantly tightened monetary policy. Since summer 2022, the European Central Bank has raised interest rates markedly to bring down inflation. Danmarks Nationalbank followed suit by also raising its interest rates.
"We believe that higher interest rates will lead to the slowdown in activity needed to bring down inflation. But it is key that fiscal policy does not counteract monetary policy in bringing down inflation," says Christian Kettel Thomsen.
If measures that increase activity in the Danish economy are agreed during the upcoming budget negotiations, measures that dampen activity to at least the same extent should also be agreed.
Danmarks Nationalbank’s expectations in a new forecast:
Denmark's gross domestic product, GDP, is expected to increase by 1.7 per cent in 2023, 1.3 per cent in 2024 and 1.3 per cent in 2025.
Headline inflation is expected to fall to 3.8 per cent in 2023, 3.0 per cent in 2024 and 2.6 per cent in 2025.
Core inflation (which does not include the prices of energy and non-processed food) is expected to be 6.0 per cent in 2023, 3.5 per cent in 2024 and 3.0 per cent in 2025.
Danmarks Nationalbank's new analyses of the Danish economy can be found on Danmarks Nationalbank's website nationalbanken.dk.
In case of questions, journalists are welcome to contact Teis Hald Jensen, Communications and Press Officer, on telephone +45 3363 6066 or by email at tehj@nationalbanken.dk.