The labour market has also held up although many of you will know that employment and wages are often lagging indicators. As Governor of the Central Bank of Ireland, I am also a member of the Governing Council of the European Central Bank (ECB), where one of our main responsibilities is formulating monetary policy to keep prices stable in the euro area.
We define price stability as an inflation rate of below, but close to, 2 per cent over the medium term. [xxiv] Price stability enhances economic growth and welfare by ensuring that households and firms can make consumption and investment decisions without the uncertainty of volatile prices. The adverse economic developments that I described earlier affect inflation.