Danske Bank Research & Economic Analysis

Danske Bank has significantly adjusted its global outlook, signaling a pivot from an easing bias toward a tighter monetary policy stance driven by robust US growth and structural demand factors like AI-related investment. Specifically, the bank now anticipates Federal Reserve rate hikes in December 2026 and March 2027, aiming for a terminal range of 4.00-4.25% provided private consumption remains robust. This hawkish Fed outlook supports a bearish forecast for EUR/USD with a 12-month target of 1.12, while the SEK and NOK are projected to reach 11.20 and 11.60 respectively against the EUR. Global inflationary pressures are intensifying, highlighted by US headline CPI hitting 3.8% and a notable shift in China, where PPI is forecast to reach 7% by summer 2026. Within Scandinavia, research indicates a divergence in performance, noting Denmark’s resilience against energy pressures while Norway exhibits signs of stagflation and declining profitability. Geopolitical risks, particularly tensions in the Middle East and the potential closure of the Strait of Hormuz, continue to underpin elevated energy costs and contribute to a global transition from deflationary to inflationary forces.