expect a pick - up in real household 1 / 4 bis - central bankers'speeches disposable income, gradually restoring consumers'purchasing power and supporting domestic economic activity. our latest forecast is for mdd growth of 3. 1 per cent this year, 2. 9 per cent in 2024 and 2. 6 per cent in 2025. the robust performance of the labour market in ireland is one of the clearest indications of the strength of current demand conditions in the economy. the unemployment rate remains at two - decade lows, and the post - pandemic growth in employment has been remarkably strong, with almost 2. 6 million people working during the last quarter of the year. relative to the available supply of labour, the number of vacancies in the economy remains particularly high. such labour market tightness – together with an expectation of some degree of real wage catch - up this year – underpins our forecast of a pick - up in nominal wage growth in the near term, above recent historical averages. turning to inflation, it is likely that headline inflation has now peaked. in the absence of further energy price shocks, we expect it to moderate this year and next, as the effect of the spike in energy prices abates. the wholesale price of gas for delivery at end - 2023 is approximately 65 per cent lower now than what was the case in october 2022. headline hicp inflation is projected to average 5 per cent this year, having averaged 8. 1 per cent in 2022, with further declines in 2024 and 2025 to 3. 2 and 2. 2 per cent, respectively. nevertheless, core inflation, which excludes the direct impact of energy prices and food and provides a measure of underlying inflationary dynamics, is likely to prove more persistent than headline inflation. this reflects the fact that the second - round effects of the energy price shock for business costs and, ultimately, the prices of other goods and services continue to filter through to the economy. it also reflects our expectation of continued labour market tighteness and more binding capacity constrainsts in the economy. overall, core inflation is expected to average 3. 5 per cent this year, having averaged 4. 6 per cent last year, and be just below 3 per cent in 2024 and 2025. however, there remains a significant amount of uncertainty around the precise path for inflation. this uncertainty stems from a number of factors : ( 1 ) global developments, including the potential for escalation

: so this is a problem with fixed but adjustable exchange - rate regimes, for example. floating exchange - rate regimes with inflation targeting ( or some variant of it ) are quite different in this respect – and i think that this is one important reason why their adoption has become relatively widespread. with inflation targeting ( any variant, soft or hard ), the sudden surprise announcement is not a prominent part of the policy arsenal. instead the market ’ s expectation of official action ( on policy interest rates, for example ) is gently nudged towards the policymakers ’ intentions by small steps, speeches, hints and graduated open market operations. a very different policy environment where, instead of dissembling before major actions, the whole aim of policy communication is towards having no surprises at all. perhaps the most extreme example of this is the federal reserve pre - commitments of recent months. let ’ s think of the two major recent ecb policy surprises : the smp in may 2010 and the 3 - year ltros in december 2011. how do we rate them considering the lessons that have been proposed above. the smp announcement occurred at a time of great market tension. sovereign risk contagion from greece had just begun, and there was the additional background of the unnerving flash crash. the danger that sovereign spreads would spiral away, undermining monetary transmission as well as a lot of other things, seemed real, especially as the funding firewall that was quickly agreed at political level would take several months to become a reality. ecb intervention in secondary debt markets looked like a sensible and urgent action needed to nip things in the bud. a moment analogous to that seized by jp morgan in 1907, if you will. for some, the smp may have looked like something close to the dreaded monetary financing, but the treaty is pretty clear on these matters, and buying plainly in the secondary market is not monetary financing. ( any student of the history of central banking knows how often central banks have been loaded up with unremunerated paper by spendthrift governments. if central bank dealings with government paper might be portrayed as lying along a spectrum, the smp lies well over to one end. ) the action was prompt – the jp morgan moment was not missed – and the spike of yields was removed. ( cf. lesson 1 ) and what about the longer run? well there have been consequences, but not those imagined at the outset. sovereign spreads widened again and, though the program was used again with