##demic : maintaining vigilance and optionality. 23 november 2021. 7 lagarde, christine. challenges along europe's road. speech to the international conference to mark the 30th anniversary of banka slovenije ( 11 may 2022 ). see here for further information on our review. 9 makhlouf, gabriel. inflation dynamics in a pandemic : maintaining vigilance and optionality. 23 november 2021. 10 this is known as the old - age dependency ratio. see population ageing and the public finances, department of finance ( 2021 ). ©2022 central bank of ireland

inflation is projected to average 6. 5 per cent this year, reflecting particularly high energy price inflation. 2 the effects of inflation will be felt across the irish economy, although more strongly for some households than others. 3 cost of living increases from higher food and energy prices tend to be proportionally larger for lower income, older and rural households, who typically spend more of their weekly outgoings on these products. i will return to this important issue, and the monetary policy response, in a few moments. in line with the wider economic recovery, the adjustment of the labour market has been striking, with numbers employed now exceeding 2019 levels and the standard monthly unemployment rate at 4. 8 per cent in april. last week, my colleague, sharon donnery, outlined some particularly interesting results from forthcoming central bank research on some specific elements of the labour market recovery. 4 the data shows that the overall recovery in employment growth is being driven by higher labour force participation, particularly for female and younger workers. 5 importantly, this increased participation does not seem to be driven, in recent quarters at least, by any structural changes arising from the pandemic. instead, for younger workers, the strength of the economic recovery has driven increased participation, while for women, increased participation is part of a longer - term trend driven by a “ cohort effect ”, due to women aged 35 - 59 being far more likely to participate in the labour market than women of a similar age in previous decades. of course, it is still early in the recovery from the pandemic and the effects on the labour market in the longer - term remain to be seen. despite the uncertainties around the economic outlook, we do expect to see the labour market tighten. this should result in stronger and broader - based wage growth than we have observed in recent years. this is a good thing, particularly as real incomes are likely to fall this year due to relatively high inflation. however, where growth in wages or profits respond entirely to the currently high rates of inflation, or are detached from underlying productivity growth, the likelihood increases that harmful higher inflation becomes embedded. inflation and monetary policy let me turn to our response to inflation. for the avoidance of doubt, the current level of inflation is concerning. it affects households ’ purchasing power and it affects business investment decisions. it affects the whole community – as i said earlier, some more than others – whether households or businesses, and whether small or large. the ecb ’ s objective is for inflation to be