(Adds quotes on bank sector, Raiffeisen Bank International)
March 18 (Reuters) - Inflation in the euro zone is
proving tougher to crack than expected and the European Central
Bank will likely need to raise interest rates further, possibly
above 4%, Austrian central bank chief Robert Holzmann said on
Saturday.
"Inflation is proving much tougher than thought," Holzmann,
a member of the ECB's policymaking Governing Council, told ORF 1
radio. "I do expect some more interest rate hikes," he said,
adding that the extent of further increases would be
data-dependent.
Asked how high interest rates could go, after the ECB raised
its benchmark refinancing rate to 3.50% on Thursday, he said:
"Some of us are hoping it will stay below 4(%). I'm afraid it's
probably going to go above 4(%)."
The ECB raised interest rates as promised by 50 basis points
on Thursday, sticking with its fight against inflation and
facing down calls by some investors to hold back on policy
tightening until turmoil in the banking sector eases.
Asked if he saw the risk of another global financial crisis,
like that of 2008, Holzmann replied: "No, because both -- the
Silicon Valley Bank problems and now Credit Suisse -- are rather
special problems."
Credit Suisse was dealing with "a longstanding restructuring
problem", he added.
Turning to the issue of Raiffeisen Bank International's Russia business, Holzmann said: "I see a lot of
challenges but it is quite possible that a solution can be
found." He did not specify what a solution could look like.
Raiffeisen is deeply embedded in the Russian financial
system and is one of only two foreign banks on the Russian
central bank's list of 13 "systemically important credit
institutions", underscoring its importance to Russia's economy,
which is grappling with sweeping Western sanctions.
Raiffeisen shares fell sharply last month after the company
received a request for information from the U.S. Treasury
Department's Office of Foreign Assets Control (OFAC) to "clarify
payments business and related processes maintained by RBI in
light of the recent developments related to Russia and Ukraine".
Austria's finance ministry earlier this month played down
concerns about the U.S. sanctions officials scrutinising
Raiffeisen.
(Reporting by Paul Carrel; Editing by Gareth Jones and Hugh
Lawson)
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