Mr Alan Greenspan, the chairman of the US Federal Reserve Board (FED), once defined the job of a central bank as being "to take away the punch-bowl just as the party gets going." The problem for the Central Bank of Ireland is that the party has been in full swing for some time now, but it is powerless to do anything to dampen the festivities, save to warn revellers of the danger of a nasty hangover.
It has done just that in its latest quarterly bulletin, cautioning - in its bluntest warning to date - that "the economy is increasingly vulnerable to a sharp slowdown in growth." It cannot influence the economy's path, however, as the traditional weapon of higher interest rates is now under the control of the European Central Bank.
Growth here has continued unchecked and our Central Bank believes that the economy is vulnerable if, for example, the US economy slows sharply or the euro rises very quickly. If the US economy hits bleak times - and a worryingly negative commentary from the Federal Reserve Board last night, suggests that this is now a real possibility - it would affect many of the big technology companies based here. A sharp rise in the euro, meanwhile, would threaten the competitiveness of companies exporting outside the euro area.
There is no doubt that these risks are real, although so far no-one is predicting a collapse in growth here. Even the Central Bank itself is predicting Gross National Product growth of 7.25 per cent next year and an increase of 59,000 in the number of people at work - a strong performance by any criteria.
Perhaps the greatest concern is the outlook for the US economy, with the FED last night warning for the first time that there is a risk of a sharp downturn. Even a less dramatic slowing in US growth would make it more difficult to attract inward investment from the US. It would also increase the pressure on many big US firms, already based here, to relocate less skilled parts of their Irish operations to low-cost economies. And, with the US now close to overtaking the UK as our single largest export market, a slowdown across the Atlantic has obvious implications for trade.
In the light of these uncertainties, the Central Bank is strongly critical of the expansionary nature of the Budget. Because of this - and the additional wage rises agreed under the Programme for Prosperity and Fairness review - it has increased its inflation forecast for 2001 from four per cent to five per cent. It correctly warns that Budget concessions will add to pressure on the housing market by giving borrowers the purchasing power to take out even larger loans.
The Bank indicates that it is pressing the financial institutions not to be too generous in giving loans - and the tone of a recent letter to the main lenders suggests it is concerned that some are being imprudent.
It is important to stress that the Central Bank is not forecasting a sudden collapse into recession. But it is pointing to our vulnerability to international trends, particularly the health of the US economy and the related dollar to euro exchange rate. Last night Mr Greenspan and the FED - the US Central Bank - indicated that they would consider cutting US interest rates in the near future in a bid to sustain a reasonable level of growth in the US. For the sake of Irish economic prospects, we must hope that this strategy succeeds.