The Central Bank has revised downwards its growth forecast for this year, warning of risks from high oil prices and exchange rate swings.
The bank also said that inflation has remained quite low and stable, and was expected to average around 2.5% this year, rising to 2.75% next year.
The Assistant Director General of the Central Bank, Tom O'Donnell, said prospects for the domestic economy were generally good.
In its latest quarterly bulletin, the bank says the environment of reasonable low inflation has been achieved despite sharply rising oil prices, strong employment growth and some pick-up in private consumption growth.
The bulletin notes that oil prices have been both volatile and at high levels for some time. It adds that the large and growing global imbalances create risks that may impact on exchange rate movements, such as a sharp depreciation of the dollar against the euro.
On house price inflation, the Central Bank says that the gradual easing in house price inflation has been a positive development.
It adds, however, that tentative evidence suggests that the extend of this moderation may not be as great as first anticipated. It says that the continuing strong rate of credit growth remains a concern.
