* ECB has obligation to raise rates when economy recovers
* German, euro zone economy to be better in Q3 than Q2
* FX moves not out of line with better data
FRANKFURT, Sept 22 (Reuters) - The European Central Bank has an obligation to raise interest rates once the euro zone economy recovers and puts pressure on inflation, Governing Council member Axel Weber was quoted on Tuesday as saying.
Weber told news agency Market News that although there was no need now for the ECB to unwind its support for the economy, leaving ultra-loose policies in place for too long could lead to inflation taking off.
"As we come out of this crisis and as the economy recovers and as the credit cycle turns, I think we do have an obligation to decisively counter long-term inflation risks," he said.
"And there is an obligation to raise rates to prevent violating our inflation objective and the build-up of excess liquidity as the economy moves forward."
Weber, who is also President of Germany's Bundesbank, said the ECB's record low 1 percent interest rates were well matched to the current economic situation.
"I do still consider, as we said at the start of this month, that the current level of interest rates is appropriate," Weber said. "At this stage it is too early to exit the currently extremely loose monetary policy."
But he added: "As the recovery becomes assured, the withdrawal of monetary stimulus will move to the forefront of the monetary policy agenda."
Economists polled by Reuters do not expect the ECB to start raising rates until the third quarter of next year, although the central bank could take back some of the extra liquidity it is supplying to markets before then. [ECB/INT]
Euribor
Weber said he expected "sizeable" demand at the next 12-month operations in September and December, but MNSI said he expected demand was likely to fall well short of June's total.
FX MOVES NOT OUT OF LINE
Weber said he expected economic recovery to be very sluggish both Germany and the euro zone would likely be stronger in the third quarter than in the second, when Germany came out of recession.
"Growth in the euro area is still in mildly negative territory, but some of the large countries, like Germany and France, have already had positive growth in the second quarter," he said. "We expect the third quarter, both for Germany and the euro zone, to be somewhat stronger than the previous quarter. So the recovery is going to continue."
Economists expect the euro zone economy to grow 0.3 percent in the third quarter. [ID:nLAG003757] Weber said recent moves in currency markets could be explained by the fact that euro zone data had been better than other regions.
The euro
"There were some stronger data coming from the euro zone compared to some other regions, so I think that the behaviour of the foreign exchange markets is not out of line with these developments over the recent months," he said.
Weber said the potential growth rate of both Germany and the euro zone had declined as a result of the financial crisis, which could mean that inflation risks emerged earlier. (Reporting by Marc Jones and Krista Hughes, editing by Mike Peacock)