The president of the German central bank, the Bundesbank, has given a strong signal that euro zone interest rates will rise soon.
Giving the Whitaker Lecture in Dublin, Axel Weber said high oil prices were just one factor contributing to inflationary risks at the moment.
He said while pressures from oil prices rises had been contained so far, the indirect effects were likely to materialise and the euro zone inflation rate was likely to exceed the European Central Bank's target this year and next year.
Mr Weber added that a 'wait and see' attitude to monetary policy could not be justified. He warned against 'sacrificing the credibility we have earned by gambling on possible short-term gains in neglecting current risks to price stability'.
The Bundesbank president said strong growth in borrowing was also a risk, adding that this was stimulated by low interest rates. He said these developments needed 'particular vigilance'.
