Consequently, while we estimate that actual GDP is currently about 1.7% below potential, this output gap explains only a minor part of the poor growth performance of recent years. Yet, even the presence of an output gap for most of the past eight years has not had a major impact on inflation.
Indeed, our internal models suggest that the degree of slack in the economy has a lesser impact on the formation of price trends than other factors do, for instance exchange rate developments – which, incidentally, have been unfavourable over the past few years.