The Central Bank says the economy is continuing to perform well.
It is growing at a rate of 5.5% this year and is expected to continue that performance into next year.
The bank says the economy is operating, in effect, at full capacity and it may be difficult to hold down service sector inflation against a background of pay increases of 6% and a tight labour market.
The bank highlights two significant risks facing the economy.
The first is oil prices which are expected to remain high and have a capacity to limit economic growth and increase uncertainty.
The second is uncertainty surrounding exchange rates. The bank warned that the US dollar is susceptible to potentially large swings because of the large government and trade deficit in the US.
Ireland has a particular exposure to fluctuations in the value of the dollar because 39% of its exports are with the US and the UK.
