Sharon Donnery: Inflation and labour market dynamics after the pandemic

Text of the 10th Annual NERI Dónal Nevin Lecture by Ms Sharon Donnery, Deputy Governor of the Central Bank of Ireland, Dublin, 10 November 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

Good morning everyone. Thank you for that introduction. Thank you also to colleagues at the Nevin Economic Research Institute for inviting me here today. It is a pleasure to give the Donal Nevin lecture this year and I very much look forward to hearing Kevin's [Callinan] response to my talk, and participating in the discussion.

My aim here today is to give you a perspective on what is driving the high levels of inflation we are currently experiencing, how labour market developments might influence the inflation outlook, and finally what all of this means for monetary policy.

The topics of inflation and labour market dynamics need little justification in the current context, or indeed to this audience, but I believe that they are also very fitting topics for a Donal Nevin lecture.

Both issues were never far from the economic policy discussions that Donal Nevin was involved in over his long career. As a founding member and former president of the ESRI, and having served with distinction in the Department of Industry and Commerce and as general secretary of the Irish Congress of Trade Unions before he retired in 1989, Mr Nevin was known as a man of great intellect and integrity, who had devoted his life to public service.  In preparing for this lecture, I had a look at some of his contributions to the policy debates of the 1970s and 80s, and it is clear that the challenges and trade-offs that arise from trying to promote sustainable employment growth and better living standards without also fuelling inflation was familiar territory.