There will probably be several more interest rate increases this year and early next year, Chief Economist of the European Central Bank, Philip Lane said.
He said these increases would be introduced before they are brought back to what he described as 'a more normal level'.
Philip Lane told RTÉ News that the possibility of a recession in the euro area can’t be ruled out.
Mr Lane said the ECB had taken a "major step" in raising rates by three quarters of one percent earlier this month.
But he said there would be several more increases in rates later this year and into the early part of next year.
The European economy is "likely to stagnate" Mr Lane said, and the possibility of a mild or technical recession cannot be ruled out.
However, he said it wouldn’t be like the major recession of 15 years ago.
He said supports should be given to people who need them to cope with energy prices but they should also be temporary.
Mr Lane said governments will have to come up with ways to balance this with those who can afford to pay higher energy prices.
Earlier this month the European Central Bank raised its key interest rates by a record 75 basis points and signaled that further hikes are on the way.
The interest rate hikes will result in repayments for over 400,000 tracker and variable mortgage holders across Ireland rising.
The move was seen as a key step in the fight against inflation even as the euro zone economy is most likely heading for a winter recession.
The ECB confirmed that it had lifted its deposit rate to 0.75% from zero and raised the main refinancing rate to 1.25%. This was their highest level since 2011.
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