Price pressures in the euro zone are alarmingly high, and medium-term price stability in the euro zone is at risk, European Central Bank Governing Council Member Axel Weber said today.
Mr Weber added that ECB interest rates at 4 per cent would help anchor inflation expectations at a low level.
"Not only are current price pressures alarmingly high but, faced with moderate though basically robust euro zone economic growth, and the continued strong money supply expansion, there are medium-term upside risks to price stability," Mr Weber said.
The euro gained versus the dollar after the release of his comments. The remarks will add to investor conviction that euro zone interest rates are not set to come down any time soon.
Mr Weber, who is also chief of Germany's Bundesbank, said the economic environment was marked by uncertainty, partly stemming from the turmoil in financial markets.
The ECB sets interest rates with a view to keeping inflation just below 2 per cent over the medium term, and has kept its main rate at 4 per cent since June.
Euro zone inflation hit a record high of 3.3 per cent in February as oil prices soared. Data released by German states today showed consumer price inflation in Germany, Europe's largest economy, probably accelerated in March.