The Central Bank has launched an investigation into claims by IT Minister Austin Gatt in Parliament that a bank official leaked confidential information to the Labour party.

Dr Gatt on Tuesday claimed that Sandro Demarco, a Central Bank manager responsible for confidential HCIP (Harmonised Index of Consumer Prices) data that is forwarded to the European Central Bank, leaked information to the Labour Party.

He even said the bank official was a consultant to the opposition, a claim that was vehemently denied by Labour leader Joseph Muscat.

In his reply to Dr Gatt's claims, Dr Muscat on Wednesday accused the IT Minister of lying and described his comments as those of a vindictive government.

He said Dr Gatt had attacked Mr Demarco because he did not find anything to argue against in the MLP's analysis of the budget. Moreover, he said the person referred to on Tuesday was not the author of a report handed over to him.

Dr Muscat said his party had never received the data mentioned by the IT Minister and insisted that the person named did not even have access to it, adding that he was willing to give evidence in court and in the streets about the matter.

The Central Bank said its investigation is being conducted in accordance with its internal procedures in order to establish the facts of the case. The investigation is being led by the chairman of the bank's audit committee, who will appoint experts to assist him.