Dr. Ella Kavanagh:

We are, as economists, very much guilty of what the Deputy outlines. It is a very difficult question to answer. Financial markets have the view that inflation will be higher in the future. They think the central bankers have got it wrong. Let us be honest that there is much uncertainty out there at present about what could happen.

My worry would be that the way we view inflation now is quite different. There is so much talk about inflation now whereas before, prior to the pandemic, it hardly entered any of our thinking. That has definitely changed. I wonder, therefore, if it will become much more a consideration for people in terms of, as Professor Whelan said as well, negotiating wages to ensure that they are able to cover this higher-price inflation they expect will be there in the future. Unfortunately, the danger is that it will lead, as wages go up, to prices going up. That would be a concern for me. It is so much in the news at present and people are so aware of it that I suppose my worry for the future would be that it becomes embedded in people's thinking and, therefore, affects the decisions which they will be making in the future. I am not sure if that covers it; it is still a bit hedgy but it gives the Deputy a sense of where my worries would be.