We are projecting Ireland’s domestic economy to grow at 2.3 per cent in 2023 and 3.3 per cent in 2024.3 Increasing price pressures across the world are putting a squeeze on real incomes and undermining macroeconomic stability. In September, inflation for the euro area was running at 9.9 per cent4 and in Ireland at 8.2 per cent.5 This is far too high.
But it is likely to stay above our 2 per cent target for an extended period. Monetary policy is aimed at reducing support for demand and guarding against the risk of a persistent upward shift in inflation expectations.6 Let’s be clear, tackling the risks from inflation is absolutely critical. We will be in a much worse place if we don’t.