. 5 %. these changes mark a rapid move away from the accommodative stance that characterised the post - financial crisis period of very low inflation, as well as the monetary policy response to the pandemic. for future interest rate changes, the governing council has said it will assess the incoming data in terms of what it means for both our outlook and the required path for interest rates to achieve our inflation target. such a datadependent, or ‘ meeting - by - meeting ’, approach is appropriate given the highly uncertain economic environment we face. it represents a departure from the more ‘ forward guidance ’ dominated approach that characterised both the period after the financial crisis and pandemic monetary policy, a part of our tool kit that is more suitable to periods when we face the constraints of the effective lower bound. what is clear at the current juncture is our current rate rising cycle still has some way to go. this was made clear by the governing council in october when it signalled the further increases in interest rates would likely be warranted at future meetings. financial markets have taken note, pricing in successive rate rises to around 3. 0 % by around this time next year. and, whilst financial conditions have quickly adjusted, with interests on loans to households and firms in the euro area increasing sharply since the beginning of the year, it will take some time for impact of rising rates to filter through to economic activity. this is the oft - mentioned ‘ long and variable lag ’ of monetary policy, and is another motivating reason for a meeting - by - meeting, gradual approach to the calibration of monetary policy. on the pace of adjustment, and the likely end - point for rate rises in this cycle, this will be informed by the incoming data on inflation, wage growth, expectations and financial conditions. if medium - term inflation expectations were to show consistent signs of drifting away from our 2 % inflation target, this would also strengthen the case for a tighter policy stance. when we look at the central tendency of the medium - term market inflation expectations data, it remains around the 2 % target. having said that, an increasing mass in the right tail of the distribution – as seen in the survey of professional forecasters in june, for example – is potentially significant, if, as some have argued, these ‘ early movers ’ are the first signs of upward drift in the inflation anchor. 34 consumer expectations have also drifted up alongside actual inflation, currently at 3 %

this share is up from around 20 % of items prepandemic. this broadening of inflation is driving up ‘ core ’ inflation – that is, hicp inflation excluding energy and food – which was 4. 8 % in the euro area and 5. 1 % in ireland in september. i emphasise core inflation trends because, for monetary policy makers, it is an important metric, for a couple of reasons. first, as headline inflation can be volatile, and, historically at least, the most volatile components tend to be the least persistent, policy makers pay close attention to measures of underlying inflation, such as core inflation. 11 underlying measures indicate where headline inflation could settle after short - term factors fade, which is relevant for the mediumterm orientation of monetary policy i mentioned before. for the euro area, private sector forecasters expect core inflation to average around 4. 0 % in both 2022 and 2023, before falling back to 2. 6 % in 2024. 12 the ecb ’ s own projections from september 2022 show core inflation at 2. 3 % in 2024. although, this still includes some residual second - round energy effects working their way through prices. these projections will be updated for the december governing council meeting, when national central banks own forecasts will be amalgamated to complete the euro area picture. the second reason we care about core inflation is because historically it has tended to move closely with wages. in assessing potential cost - push inflation drivers, wage developments are an important consideration, particularly wage growth that is over and above labour productivity growth. of course, a wide range of other non - wage costs are also relevant, as recent developments have shown. and let me be clear, wage pressures are not the primary driver of the current bout of high inflation. but what we clearly want to avoid is a situation where, once the current supply shocks abate, domestic wage pressures are a factor contributing to inflation remaining above our target over the medium term. this is a timely point to move on to labour market developments. labour market and the outlook for wages the outbreak of the pandemic ended one of the longest continuous employment expansions on record : between 2013 and 2020, employment grew in all but a handful of quarters. net inward migration was a key driver of these trends : between 2015 and 2019 net migration – many of whom were of working age – totalled some 110 thousand people, a large number in the context of an increase in overall employment of 263 thousand over