The fact that the central bank’s objective is price stability does not prevent short-term aspects of the significance of the interest rate to employment from being taken into account, but only in situations where this does not conflict with the objective of price stability. As will be known, Danish monetary policy is related closely to that of the euro area.
In a more indirect way, our objective is also price stability, since in order to maintain a stable exchange rate our inflation must not deviate significantly from inflation in the euro area. Since World War II, Denmark has pursued a fixed-exchange-rate policy in various guises, with varying degrees of firmness. Denmark reaped favourable experience from its consistent fixed-exchange-rate policy in the 1980s and 1990s.