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Orphanides: ECB Ready to Raise Rates if Needed

The European Central Bank would be ready to raise interest rates again if necessary, new ECB Governing Council member Athanasios Orphanides said in a German newspaper interview published on Thursday.

Orphanides, who has been attending Governing Council meetings for some time in the lead-up to Cyprus adopting the euro on Jan. 1, told Handelsblatt he shared the concerns of other policymakers "who are extremely worried about inflation."

"Just because the ECB Governing Council waited for the turn of the year does not mean that it should not be ready to raise interest rates further if that was necessary," he was quoted as saying.

ECB staff projections for inflation to likely fall under 2 percent in 2009 were too optimistic in that they expected the current spike in food and commodity prices not to feed into wage demands and price setting, he said.

Countries including Cyprus indexed wage increases to inflation, which hit a 6-1/2 year high in the euro zone of 3.1 percent in November, with a similar rate expected for December.