cigarettes. still, thanks to the maintained relative stability of the exchange rate in extremely uncertain global circumstances, core inflation continued to move below headline inflation and measured 10. 1 % y - o - y in december. chart 4 inflation projection ( y - o - y rates, in % ) chart 5 movement in the key policy rate and average repo rate 7. 0 6. 5 ( daily data, p. a., in % ) key policy rate lending facilities rate deposit facilities rate average repo rate 6. 0 5. 5 5. 0 4. 5 4. 0 3. 5 3. 0 2. 5 2. 0 1. 5 1. 0 0. 5 - 2 12 3 source : nbs. 12 3 12 3 12 3 0. 0 1'20 5'20 9'20 1'21 5'21 9'21 1'22 5'22 9'22 1'23 source : nbs. when it comes to our expectations for the coming period, as i pointed out at the beginning, the new inflation projection is lower than three months ago. under the february central projection, we expect y - o - y inflation to remain elevated in q1 2023 4 оf 10 as well, mostly due to the continued pass - through of high cost - push pressures from the previous period onto prices of food and other industrial products, and to the adjustment in electricity and gas prices. it is then expected to strike a downward path and decline more sharply in the latter half of the year, with inflation at end2023 being two times lower than at the start of the year. inflation is anticipated to retreat within the bounds of the target tolerance band around mid - 2024, which is sooner than we expected in our previous projection. inflation ’ s decline should be supported by past monetary tightening, waning effects of global factors driving energy and food price growth in the past period, a slowdown in imported inflation, and subdued external demand amid the anticipated slackening of global growth. the downward trajectory of food inflation, expected until the end of the projection horizon, may possibly be moderated, though not jeopardised, by the imperfect market structure on the supply side, i. e. the absence of any stronger competition in this segment. as global cost - push pressures remain robust despite signs of easing, we have continued to raise the key policy rate. in this way, we influenced inflation expectations and contained the second - round effects from elevated food and energy

– and are 3 / 6 bis - central bankers'speeches currently consulting on plans to : enhance our hub to deliver deeper, clearer and more informed engagement ; and to establish an innovation sandbox programme, aimed at innovative initiatives which are consistent with our public policy objectives. 6 the public consultation closes this week, and we are excited to launch the first round of our sandbox programme later this year. our engagement doesn't end with the market, however. engagement with peer regulators is also vital – in particular given the rapidly growing and cross border nature of many of these innovations. this is part of the reason i am here today. it is also why we are actively participating in the supervisory convergence work of the european supervisory authorities – and we welcome their efforts to establish common supervisory and regulatory approaches in this area, so that we can take full advantage of the potential of innovative technologies. 7 - while delivering trust through the cycle so, our innovation engagement has represented a new approach for the central bank of ireland. it has helped firms better meet our regulatory expectations ; and it has helped the central bank better understand innovations happening in the system. two key outcomes for us – for we want to authorise and supervise innovative firms, as we recognise the benefit of them for our citizens. but while this different approach has shown real benefits, it is important to say that such engagement does not come at the expense of our fundamental roles of regulation and supervision. rather, as i have said before, our engagement is a complement to these roles – which remain crucial in the face of rapid financial innovation. 8 for no matter how pioneering the innovation, the basic requirements of adequate risk management remains. indeed, i would argue that the more complex nature of some of these innovations, and the speed at which they can scale and develop, makes the basics all the more important – and regulation and supervision of them all the more essential. i have already mentioned the importance of trust – not only for the financial system but for innovations themselves. for me, ensuring there is trust in the financial system is a fundamental part of a regulator's role. and it is through supervision that we deliver that trust throughout the cycle : trust that firms we authorise are of a sufficient standard to provide financial services in ireland and europe ; trust that firms we supervise are well run, and are managing the risks to them and their customers ; and trust that should a firm fail, they do so in a way that is orderly and that ensures consumers'funds are sufficiently safeguard