The Taoiseach has criticised what he called the pervasive negativity in the media about the Irish economy.

Commenting on the downgrading of the economy by Moody's, Brian Cowen said the National Treasury Management Agency had made clear that we are a very stable economy.

The international ratings agency, which helps investors assess investment risk, today downgraded Ireland for a second time since the financial crisis began.

Moody's downgraded Ireland's sovereign bond rating to Aa2 from Aa1.

However, the agency has moderated its outlook for Ireland from negative to stable, meaning a further downgrade is unlikely.

Moody's Senior Credit Officer and lead analyst for Ireland, Dietmar Hornung, said the 'downgrade was primarily driven by the Irish Government's gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability'.

Rival agency Standard & Poor's, which downgraded for a second time in April, has maintained a negative outlook for the country.

The NTMA, which manages the national debt, has said the downgrading of Ireland's credit should not have an impact on the country's debt.

The agency, which is having its monthly auction of Irish bonds tomorrow, said the rating decision was not based on any new information.

The NTMA's Oliver Whelan said there were positive elements in the Moody's announcement.