By Sabine Siebold and Paul Carrel

(Reuters) – The European Central Bank (ECB) will likely need to raise interest rates further to tame persistent inflation, two leading hawks on the bank’s policymaking Governing Council said on Saturday, while playing down the risk of repeat of the 2008 financial crisis.

The comments from the central bank chiefs of Austria and Belgium backed up remarks a day earlier from two fellow hawks – their Slovakian and Lithuanian peers – and pressed the case for higher rates to tame inflation running at 8.5% in the euro zone.

The ECB raised interest rates as promised by 50 basis points on Thursday, sticking with its fight against inflation and facing down calls by some investors to hold back on policy tightening until turmoil in the banking sector eases.

Robert Holzmann of Austria and Pierre Wunsch of Belgium said further action would likely be needed.

“Inflation is proving much tougher than thought,” Holzmann told Austria’s ORF 1 radio. “I do expect some more interest rate hikes.” He added that the extent of further increases would be data-dependent.

The ECB has hiked rates by 350 basis points since last July, lifting its benchmark refinancing rate to 3.5% on Thursday.

“We know that we have to do more of this,” Wunsch told Belgian paper L’Echo. “At what measure? That’s not clear. It will be meeting by meeting.”

Asked how high the benchmark rate could go, Holzmann replied: “Some of us are hoping it will stay below 4(%). I’m afraid it’s probably going to go above 4(%).”

Wunsch said the ECB had a “long way to go” if its baseline inflation forecast materialised.

The ECB on Thursday projected inflation would remain above its 2% target through 2025, based on forecasts it said had been formulated before a huge selloff in bank shares this week.

The ECB also acknowledged on Thursday the outlook had become more uncertain after the collapse of two banks in the United States and more problems at Credit Suisse Group.

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Banking stocks globally have been battered since Silicon Valley Bank collapsed and Credit Suisse was forced to tap $54 billion in central bank funding, raising questions about other weaknesses in the financial system.

Asked if he saw the risk of another global financial crisis, like that of 2008, Holzmann replied: “No, because both – the Silicon Valley Bank problems and now Credit Suisse – are rather special problems.”

Credit Suisse was dealing with “a longstanding restructuring problem”, he added.

Wunsch said: “We don’t see a structural problem with European banks”, though he added it remained to be seen what impact the events in the U.S. banking sector and around Credit Suisse would have in coming days.

“We do neither see a risk of contagion nor a risk of instability if we look at the figures from a rational perspective,” Wunsch added.

Asked about the future of Credit Suisse, Wunsch said he only saw a “very low” likelihood that the bank might go bankrupt.

“For one, according to the public figures its situation is not bad, in itself, and, secondly, the Swiss authorities would intervene if necessary as it is a bank of systemic importance,” he said.

(Additional reporting by Balasz Koranyi; Editing by David Holmes)

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