Mr. Gabriel Makhlouf:

I thank the Deputy. I will take his questions in turn. To put it in my own terms, the first question was about how long it would be before I would get worried and feel that we needed to act, that is, how long would inflation have to continue at these levels for me to get worried? I am worried today. I am not complacent about this. I am very conscious that inflation is impacting on households across the country today. On the other hand, it is not so much a question of a certain amount of time before we feel we need to take action. However, it is fair to say that the longer inflation persists at these levels, the more likely it is that this will start feeding into wages and having other second-round effects. For me, it would matter more to see evidence that supply blockages were being repaired and falls in energy prices.

With regard to the supply blockages, there is a sort of consensus that these are blockages as opposed to structural changes. If I may expand a little bit on the supply blockage issue, they are essentially a reflection of a very big increase in demand around the world as a result of restrictions being lifted. Growth in Ireland, in the euro area and around the world has increased significantly over recent months because restrictions were lifted. That has led to a big demand. People had been saving during the pandemic and have now decided to spend their savings. They have started to spend them either on consumer goods or on services, that is, going out to restaurants and the like. That very significant increase in demand has put pressure on supply. This would have happened in an ordinary situation if demand had increased by as much as it has but, in the meantime, a lot of the supply chains closed down because of the pandemic. They have had to reopen, which has taken time. Famously, many of the ships that transport goods from Asia to the United States or Europe are in the wrong place. It takes time for them to get rearranged and ready to transport goods.

If, as we hope, we begin to see evidence that those sorts of supply blockages are being repaired, in some respects, it will not matter whether it takes four months or a year. If they are being repaired, we know that they will subside. For example, we know that there is a big shortage of semiconductors. This is affecting car manufacture but also the production of white goods like fridges and so on. This shortage is likely to persist for much of 2022. However, we also know that the supply of semiconductors will come on stream. That is a question of timing. It is not simple to say how long this would have to go on for before I would start to worry. It is more the case that, if I see evidence that these blockages are not being fixed or that different things are happening, I would start to worry. However, I am worried today. I hope that I will be a lot better informed in a few months' time because we will have seen more evidence.

On the Deputy's point on housing, I hope he will forgive me because I have forgotten the overall question. I recall him asking whether credit unions could be a third force. There is no reason why credit unions could not play a role in the system. On the other hand, the biggest players in terms of lending money and providing mortgages are the big banks because they have the asset base to do that. The focus of the Central Bank is always going to be on making sure that the system works in a stable way and that reckless lending and reckless borrowing are avoided, as I have said in the past. That is a particular focus of ours. We do not want to repeat the mistakes of the past. I do not know if there is anything Dr. Cassidy wants to add on that particular point.