The Central Bank of Ireland has published its third Quarterly Bulletin of 2026, modestly raising its modified domestic demand growth forecasts to 3.8% for 2026 and 3.4% for 2027. Resilient consumer spending and multinational investment, particularly in artificial intelligence and data center equipment, are expected to support average annual growth of 3.5% from 2026 through 2028. Headline inflation is forecast to average 3.4% in 2026, ease to 3.1% in 2027 and return to 2.0% in 2028. Higher energy prices linked to the Iran-US war and elevated domestic services inflation create upside risks. In a severe scenario with substantially higher oil and gas prices, inflation could exceed the central forecast by more than 2 percentage points in 2027 while growth would weaken. Employment growth is projected at 1.2% in 2026 and 2.1% in 2027, with net inward migration remaining an important source of labor supply. Housing output is expected to increase through 2028, but the average period from an initial planning application to completion has doubled over a decade to four years. The bank called for timely infrastructure and productivity reforms to support the forecast increase in supply. It also urged the government to observe the Summer Economic Statement’s expenditure ceilings, limit reliance on concentrated and potentially temporary corporation tax receipts, and use temporary, targeted support for households most exposed to higher energy costs.
2026-09-16Central Bank of Ireland
Central Bank of Ireland raises domestic demand forecasts, projects 3.4% inflation in 2026
The Central Bank of Ireland raised its modified domestic demand growth forecasts to 3.8% for 2026 and 3.4% for 2027, supported by consumer spending and multinational investment. Inflation is projected at 3.4% in 2026, with energy prices creating further upside risk. Housing output should rise through 2028, but four-year delivery times strengthen the case for timely reform and fiscal restraint.