Their ability to deal with unexpected shocks, such as an oil crisis or a jump in other world commodity prices, would be severely restricted unless the target bands were quite forgiving. But if the inflation target range was wide enough to accommodate these sorts of disturbances, it was unlikely to provide much discipline or comfort in more tranquil periods.
There are also medium-term challenges to be faced, most notably perhaps, the implications of population ageing. Although occurring somewhat later in Ireland than elsewhere, the impact is likely to be significant. Some measures have already been taken, such as increasing the retirement age in the public sector and the setting up the National Pension Reserve Fund to meet future public pension liabilities.