By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Martin Kocher said Tuesday that a further interest rate increase would be needed soon if the ECB's new projections confirm that upside risks to inflation have increased.

The Austrian National Bank governor said the latest rise in Austrian inflation was primarily due to renewed sharp increases in energy prices, but persistently strong services inflation showed that vigilance was also needed over underlying price pressures.

"Upside risks to inflation have also increased again recently in the euro area as a whole," Kocher said in a statement. "If this picture is confirmed in the ECB's new forecast, in my view a further, prompt interest rate increase is necessary."  

"We must prevent inflation from remaining above our 2% target over the medium term," he said.

Kocher nevertheless stressed that policy decisions would continue to depend on the full set of incoming information.

"The overall assessment of the data is decisive," he said. "We will therefore continue to decide from meeting to meeting and act when it is necessary to safeguard price stability over the medium term."