A European Commission spokeswoman has criticised last night's decision by Moody's to downgrade Ireland's debt to junk status as 'incomprehensible'.
Pia Ahrenkilde Hansen was speaking to reporters in Brussels.
'Yesterday's decision by Moody's to downgrade Ireland's credit rating is incomprehensible,' Ahrenkilde Hansen said.
'Its timing as the second quarterly review mission is preparing to announce its findings is, to say the least, questionable.
'The Irish Government has shown determination and decisiveness in its implementation of the economic adjustment programme.
'Ireland's banks are being recapitalised and its financial system, more broadly, is being repaired.'
Exports are growing strongly and the country is regaining competitiveness, she added.
'There is, of course, much more work that lies ahead and clearly there can be no room for complacency, but Ireland is now on the right track.'
Last night's downgrade led to a sharp rise in the interest rate demanded by investors to buy Irish debt.
The yield on 10-year Irish government bonds rose by more than half a percentage point to 14.365% this evening.
Moody's last night said it had reduced Ireland's government debt ratings by one notch, to Ba1 from Baa3, saying there was a 'growing possibility' that the country would need more bail-out aid in late 2013, when the current EU/IMF programme is due to end.
The agency said a key factor in the downgrade was the increasing possibility that investors holding government debt would have to take part in any new rescue deal, and would be likely to suffer losses as a result.
This morning, Oliver Whelan of the National Treasury Management Agency said the Moody's decision would make it more difficult for Ireland to return to the bond markets at the end of next year.
A spokesman for the Department of Finance last night described the Moody's decision as 'a disappointing development', saying it was at odds with the views of other rating agencies. Referring to the timing of the announcement, the spokesman said it was difficult to see how it reflected an agreement reached by euro zone ministers to increase the flexibility and scope of the current EU rescue mechanism.
