Capacity constraints pose a risk to Irish inflation creeping up again, warns Central Bank governor

Mr Makhlouf said there is a “bigger risk here that inflation will return” to higher levels in Ireland because the economy is dealing with more capacity constraints than other countries in the eurozone.

The Central Bank is also projecting real wages to grow - as inflation continues to recede. Mr Makhlouf said he isn’t concerned that these wage increases will feed inflation as they are built into their projections.  Picture: David Creedon

Central Bank governor Gabriel Makhlouf has warned that there is a bigger risk of inflation returning to higher levels in Ireland due to capacity constraints within the economy.

Mr Makhlouf also said the nature of the monetary union means “we won’t have the means to deal with it directly”.