Gabriel Makhlouf: What's over the horizon? Monetary policy in 2023 and beyond

Remarks by Mr Gabriel Makhlouf, Governor of the Central Bank of Ireland, at the Institute of International and European Affairs (IIEA), Dublin, 5 December 2022.

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

Central bank speech  | 
05 December 2022

Good morning. I am delighted to be at the Institute of International and European Affairs today to share my views on the outlook for monetary policy.

Supply chain disruptions, a rapid and strong post-pandemic rebound in demand, and war-related energy and food price shocks are contributing to unacceptably high levels of inflation in Ireland and the euro area.

Inflation is far in excess of our 2% target, at 9% in Ireland and 10% in the euro area as a whole in November.  Some euro area countries are experiencing inflation above 20%, in part because of a greater exposure to Russian energy imports.

High inflation is eroding real incomes, threatening resilience and economic stability, while tighter financial conditions are increasing the cost of credit and putting downward pressure on asset values.2 The ECB, like other central banks globally, has raised interest rates at an unprecedented pace in order to bring supply and demand back into balance, and return inflation sustainably back to our 2% target.  The main ECB policy rate has increased from -0.5% in June to 1.5% in October, with further increases likely.