THE Central Bank is attempting to head off an inflation rise by supporting the pound and pushing it back over parity with sterling.
The pound's fall could push up import prices from Britain, creating inflation, but late yesterday the Bank pushed the pound back over loop sterling after it fell to 99.4p.
The Minister for Finance, Mr Quinn, and the Central Bank Governor, Mr Maurice O'Connell, are in regular contact on developments.
Mr Quinn is believed to be considering asking the Director of Consumer Affairs to ensure retailers do not put up prices too rapidly in response to higher import costs from Britain.
Next year's inflation rate will count towards qualification for the single EU currency, meaning that the Central Bank will strive to keep the pound firm against sterling as a safeguard against rising prices.
The Bank has ample foreign currency reserves to buy pounds and support the currency, but much will depend on whether sterling continues to rise across the board.
The Government is also determined that the inflation rate will be held down, with key talks on pay just starting with the social partners.
The Central Bank bought pounds on the markets for the third successive day yesterday and may step into the foreign exchange markets again next week, if sterling's surge continues.
The Bank is also attempting to avoid volatility in the pound's exchange rate against the other ERM currencies.
