“Danmarks Nationalbank finds that there is no pressing need to implement measures to adjust economic development. Fiscal policy is already slightly expansionary, interest rates are historically low, and most observers share the view that an upswing is in the making. Although the unemployment rate is still low, both by international comparison and in a historical Danish perspective, it is on the increase.
Measures of underlying inflation, such as core inflation, continue to hover around 1% and have yet to show a convincing upward trend. To some extent, this lagged response is in line with the standard pattern of demand-driven expansions in the euro area.4 As demand picks up, employment initially reacts slowly, which boosts overall productivity and lifts margins.