The Minister for Finance has hit out at the business community for fuelling fears about rising inflation, suggesting it may be using the sharp drop in the value of the pound to "jack-up" prices. But despite the continued weakness of the Irish currency, Mr McCreevy did nothing to ease the pressure on the pound yesterday, again refusing to comment on the exchange rate at which the Governments wants the pound to join monetary union. "There has been a lot of speculation about the exact exchange rate at which the Irish pound will enter EMU. But, despite what commentators want me to say, I have taken a steadfast vow of silence on this matter," he said yesterday.

Mr McCreevy moved to downplay the impact that the fall in value of the pound would have on inflation, however, insisting that concerns that it would trigger widespread price rises throughout the economy fail to take account of all market developments. He said there were businesses which had their own reasons for promoting this view, which would allow them to "jack-up" prices. "Some people want to talk us into an inflationary environment," he said.

Pointing to the quite significant movement in value of the pound against sterling and the deutschmark over the last couple of years, the Minister noted that this had not had inflationary consequences.

Mr McCreevy added that he saw "no reason" to revise the Department of Finance's inflation forecasts as a result of the weaker currency. In its 1998 Budget forecasts, the Department predicted that inflation would rise from 1.5 per cent to 2 per cent this year. Some economists have already indicated they will be revising their forecasts up to around 3 per cent on the back of the sustained drop in value of the pound on the foreign exchange markets.

Refusing to comment on the exchange rate at which the Government wants the pound to join EMU, Mr McCreevy said the decision would be based on the level at which the Government felt was appropriate for the economy. It would be unable to make that decision until next May, he added. "The final decision will take overall consideration of the needs of the economy in the fullest sense of the term."

The exchange rates at which the various currencies joining EMU will be fixed will be decided in the first weekend in May. Mr McCreevy said that it would only be possible at that stage to say anything on the rate at which the pound would enter the single currency.

In the interim, he said it would be "irresponsible" and "unwise" for him to comment on what the exchange rate should be. "The least said about this particular matter, the better. It is not a matter for me to determine what the value of the pound is on a day-today basis." The absence of any comment from the Government on the rate at which the pound will be fixed has led to speculation in the markets that the pound will enter EMU at its central rate within the ERM of DM2.41.