Danske Bank's chief economist, Frank Jullum, has shifted the bank's outlook on interest rates, moving away from previous assumptions of cuts within the next few years. Initially, Danske Bank anticipated four rate cuts in 2026, but current economic conditions have prompted a reassessment. Inflation has risen to 3.6% in January, which contrasted with previous forecasts, indicating a deeper and more persistent economic challenge than expected.

The revised outlook reflects a broader perspective among financial institutions that once anticipated rate cuts for the year. As inflation pressures continue to mount, which also sees core inflation increasing to 3.4%, market analysts have begun to retract earlier predictions. Jullum notes that there is now a significant possibility that rates may remain the same or even be increased, depending on the developments in the economy and inflation trends.

This nuanced understanding of inflation—as captured by core inflation metrics, which exclude volatile prices such as food and energy—highlight a growing concern for Norges Bank. This development not only impacts immediate economic forecasts but also suggests broader implications for household finances and spending, thus forming a critical aspect of the national economic dialogue moving forward.