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The Central Bank, in its latest quarterly bulletin, warned that further stimulus measures could aggravate inflation. It revised up growth forecasts citing resilient consumer spending and foreign investment, but cautioned that a fiscal package should stay within the limits set in the Summer Economic Statement. The bank emphasised that broader cost‑of‑living supports are presently less necessary and that any political decision on additional aid must consider cyclical pressures.
To avoid stoking existing inflationary pressures, Government should adhere to expenditure ceilings, regulator says In its latest report, the Central Bank revised up its growth forecasts for the domestic economy on the back of 'resilient consumer spending' and multinational investment.
Photograph: Alan Betson/The Irish Times In its latest quarterly bulletin, the regulator sounded a note of caution against further measures to cushion the hike in living costs. To avoid stoking existing inflationary pressures, the bank said, the Government should adhere to the expenditure ceilings outlined in the Summer Economic statementAsked if that allowed for further cost-of-living supports, the bank’s director of economics and statistics Robert Kelly said: “Ultimately that’s a political decision.
Dublin 8 industrial site with potential for over 400 homes guiding at €10m“What we are seeing relative to three and six months ago is, the need for broad cost-of-living supports is less. ”The Government has signalled that an €8.5 billion fiscal package, comprising €1.5 billion in tax measures and €7 billion in spending measures, will be introduced in “To go more than that, there’s just not a need right now, when we look at the cyclical pressures, to have a stimulus in the economy,” Kelly said.
But the Government has been criticised for adopting a universal approach to energy credits instead of tailoring them to the most vulnerable households.has, in contrast to Harris, played down expectations of a big tax giveaway, saying the proposed cuts to income tax would be “modest”, benefiting most people by only a few hundred euro a year. In its latest report, the Central Bank revised up its growth forecasts for the domestic economy on the back of “resilient consumer spending” and multinational investment.
Modified domestic demand, a bespoke measure that captures domestic activity, is now projected to grow by 3.8 per cent this year and by 3.4 per cent in 2027. Headline inflation is forecast to average 3.4 per cent in 2026, moderating to 3.1 per cent in 2027 and 2 per cent in 2028. But the bank warned that there were significant upside risks to these inflation projections given the uncertainty over the path of the conflict in the Middle East.
In a severe scenario where oil and gas prices rise sharply above the bank’s baseline and remain persistently elevated out to 2028, inflation could accelerate above 5 per cent next year, exerting downward pressure on consumer spending and growth.
“Trade tensions remain high and firms are adjusting to a fragmented and less favourable trading environment,” Kelly said. “Across Europe, the summer period saw record temperatures and prolonged drought. This has placed strain on food production and transportation, adding a further impetus to already high inflation. ” The bank cautioned the Government to stay inside the expenditure ceilings outlined in its recent Summer Economic Statement.
The Government is expected to collect a record €35 billion in corporate tax receipts this year. Without them, the projected surplus would morph into a deficit.
“Maximising the delivery of new public infrastructure to address known deficits in key national infrastructure and crowd in higher private investment will boost the economy’s long-run growth potential,” the Central Bank said. Dún Laoghaire business park with scope for residential scheme seeks €3mIrish acts Aaron Rowe and Beoga quit Ed Sheeran’s US tour in protest over PalestineSydney Sweeney’s charmless gambling ad a grim reminder of the Page Three daysIrish borrowing costs hit bailout-era highs as investors up bets on rate hikes
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