The Governor of the Central Bank has said the recent increase in house prices is not indicative of a property bubble forming.

Professor Philip Lane said the current regulatory framework, introduced in February 2015, would do a lot to dampen bubble pressures.

He also committed the Central Bank to an annual review of the mortgage lending restrictions.

Governor Lane said if more was needed to be done, it would be, but the framework as it was currently envisioned would provide "self-correcting brakes" in the system.

The Governor was speaking as the Central Bank reported profits of €2.3 billion for 2016.

In its annual report published today, the regulator said €1.8 billion of that will be returned to the Exchequer.

The income paid to the state has increased in recent years as a result of the government debt the Central Bank acquired during the financial crisis, mainly owing to the liquidation of the IBRC.

It has been offloading bonds linked to the liquidation and that has resulted in record returns to the state in recent years.

The return should diminish in the medium term as the banking environment normalises, however.

Governor Philip Lane said that while the domestic economy continues to improve, external risks remain significant. 

"These include risks relating to the effects of Brexit, but also the risks associated with any increase in global protectionism and/or elevated levels of risk aversion in international financial markets," he said.

He said the Central Bank continues to assess and analyse the implications of Brexit on the economy, including the potential for a more diverse range of firms and business models that would require authorisation and supervision.

Professor Lane also said that many financial firms based in London have yet to decide on where to move operations to as a result of Brexit so it is too early to say if different interpretations of regulatory rules will play a role.

"My aim has been to make sure that regulatory issues do not play a role in these decisions. I think we'd have to wait for more decisions to get enough of a case load to work out whether regulatory arbitrage is a substantive issue," he told a news conference today.

Meanwhile, the Governor of the Central Bank would not be drawn today on whether the European Central Bank might increase interest rates next year.

Philip Lane said no decision had been made on 2018, but that the current policy remains appropriate.

He said some slack remained in the euro zone economy and that over the course of the year the ECB's governing council would monitor the dynamic behind inflation.

However, at the moment, he said underlying inflation remained below where it should be.

The Governor said economic performance in Ireland was strong with some good numbers, but he added that there were downside risks, notably around Brexit and talk of protectionism.

He said the weakness in sterling against the euro was a problem for certain sectors of the Irish economy.

Governor Lane said he did not anticipate any major changes to the international trading system in the immediate term.

However, he said the Irish economy was so plugged into the global economy that any disruption to the global trading system was a challenge for Ireland.