By Sergio Goncalves
LISBON (Reuters) -Declines in the international market prices of raw materials, energy and foods will need to start making their mark on consumer goods or interest rates will have to be raised further, ECB Governing Council member Mario Centeno said on Friday.
"The overwhelming majority of inflationary shocks, if not all, have now reversed," he told a news conference in Lisbon, adding that the full effects of the reversal had yet to reach final consumers.
He said that if economic agents fail to transmit this drop in prices of raw materials, energy and food to consumers, "it will put additional pressure on monetary policy and it will prolong the period of interest rate hikes."
The European Central Bank raised euro zone borrowing costs to their highest level in 22 years on Thursday and said stubbornly high inflation all but guaranteed another move next month and likely beyond that too.
While inflation remains high, Centeno said, interest rates will remain in "restrictive territory", adding that he expected this to continue for some time after the summer.
Centeno said that, although "markets anticipate a rate hike in July, the ECB will make its decisions meeting by meeting, based on data".
He said that "the next meetings will be crucial" and the ECB should analyse the evolution of inflation in June and July, indicators of financial stability and "see what is happening to the economy of the euro zone, which is in technical recession and has stagnated".
"Monetary policy takes time to have effect", he said, adding that the ECB has to "be careful" in monitoring how the economy is adjusting.
"Anticipating the results of the meetings is not a good exercise ... all statements about the future of interest rates must respect the rule of silence and be based on facts," he said.