In its latest Quarterly Bulletin, the bank predicts that Modified Domestic Demand will expand by 2.1% in 2024, down from its forecast in March of 2.2%.
It is also highlighting that the outlook for consumer spending is sensitive to potential changes in household savings behaviour, with the pick-up in consumption appearing to be weak relative to the rise in incomes.When it comes to the public finances, the Central Bank said that it would not be appropriate to continue with an expansionary fiscal stance and that a continuation of spending increases without compensating tax measures could contribute to overheating risks.
The expected shortfall in spending on decarbonisation measures also needs to be addressed, Mr Kelly said. "The funds are a good way of putting that money away to address demographic issues down the line and also, in part, to address the climate needs," he said. "Sustainably addressing infrastructure constraints in housing, water, energy and transport should be priorities over the medium-term," the Central Bank said.
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