Austrian central bank governor Klaus Liebscher has hinted that the European Central Bank may raise its key interest rates further to keep a lid on inflation.
'The ECB will do everything to bring inflation back below 2% in the medium term,' Mr Liebscher told the Austrian newspaper Kurier in an interview.
As head of the Austrian central bank, Liebscher sits on the ECB's rate-setting governing council, which has so far resisted strong political pressure to lower borrowing costs to counter the negative economic effects of the strong euro.
The ECB is concerned about rising inflation. Euro zone inflation hit 3.1% in November, the highest level for six and a half years, owing to rising costs of energy and food products.
The ECB 'takes into consideration short-term fluctuations, such as those resulting from the price shocks in oil and raw materials' when setting interest rates, Liebscher said.
'But it's important that such price shocks don't become entrenched via second-round effects in wages and consumer prices,' he added.
