Dr. Mark Cassidy:

The Deputy is absolutely right about the improvement in the public finances. We have estimated slightly different figures from the ESRI, which we will publish in a couple of weeks. We probably see the economy remaining in deficit this year. Previously, we expected a return to surplus next year. We will probably still be looking at that but there is much uncertainty about how it will materialise.

In terms of what more could or should be done, all I can say is that given how things have developed, more measures may well be warranted or necessary. That is a matter for the Government, however. When one gets down to that type of decision, it is matter for elected representatives generally to debate. The public finances were in a healthier position. There were many improvements in recent years and there was a positive momentum coming into 2022, which leaves us better placed to address these shocks, which is a welcome development.

As to the ECB, I will restrict my comments to what it would say which is that while its focus is to achieve its price stability target, inflation of 2% over the medium term, it will not ignore current inflation developments. While the Deputy is correct that it represents a supply-side shock, and the ECB can do nothing about global supply no more than about domestic policy, but because of the risk of second-round effects, the higher inflation is, the more likely it could pass through to underlying inflationary developments in the medium term.

The ECB published new forecasts two or three weeks ago that expect inflation to return to around target levels by 2024. It is not forecasting excessive inflationary pressures in the coming years. It also announced a moderation in asset purchases and the rate at which it will continue asset purchases until the summer of 2022. It will announce at its next meeting in June what it will do in the third quarter. It is emphasising optionality in the current circumstances given the high degree of uncertainty. The ECB will undoubtedly remain absolutely committed its primary mandate that is price stability. If there are signs that the medium-term outlook is for inflation above 2%, it will not hesitate to act. However, on the other hand, if things go in the other direction from an inflation perspective, it will act in the other way. The ECB is not committed.

It is maintaining its options open. They will know a lot more in June.