(Bloomberg) -- The European Central Bank must push on with interest-rate increases despite the souring outlook for the euro-zone economy , according to Executive Board member Isabel Schnabel.

While the 19-member currency bloc may stagnate rather than slip into a recession, Germany is less likely to avoid a contraction, Schnabel said in an interview with German website t-online published Thursday.

Inflation -- already the fastest since the euro was introduced and almost five times the ECB’s 2% target -- may not have peaked, she said.

“A looming downturn would have a dampening effect on inflation,” Schnabel said. “Of course, we take this into account when calibrating our monetary policy. However, the starting point of interest rates is very low, so it is clear that we need to continue raising rates.”

With concern that more people expect inflation to exceed the goal in the medium term, it’s “all the more important” to send clear signals that people can rely on the ECB and that price gains will ease again, she said.

The ECB is walking what Vice President Luis de Guindos this week called a “fine line” as officials agree on the need to tackle inflation but risk worsening Europe’s already deteriorating growth prospects if they raise rates too much or too quickly.

Schnabel’s comments come hot on the heels of the latest hike by the Federal Reserve, which raised borrowing costs by 75 basis points for a third straight meeting on Wednesday.

They also follow a downgrade in the euro area’s economic outlook by Deutsche Bank, which now sees a much deeper recession on the horizon after Russia slashed energy supplies in retaliation for sanctions over its attack on Ukraine.

With five weeks still to go, ECB policy makers are reluctant to reveal their preference for October’s rate increase.

“I’m expecting that the ECB’s Governing Council will continue to increase interest rates at its next meeting,” Schnabel said. “What I cannot say is how big this hike will be or at what level we will stop increasing rates. We are deciding meeting by meeting, based on an assessment of all the economic and inflation data.”

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