BERLIN, June 21: The European Central Bank needs to look seriously at current interest rate levels to safeguard its credibility and given high inflation expectations, Executive Board member Juergen Stark told German magazine Der Spiegel.

Commenting specifically on a looming rate decision in July, he added: We will not let ourselves be locked in over a long period of time, rather we will decide on a case-by-case basis what is necessary to guarantee price stability over the medium-term.

ECB President Jean-Claude Trichet shocked markets earlierthis month when he said a rate rise was possible in July but not a certainty. Investors now expect a rise to 4.25 percent next month and another hike to 4.5 per cent by the end of the year, but have trimmed bets for more aggressive action after Stark and others said policymakers were not mulling a series of rate increases.

Stark told Der Spiegel the ECB had taken a wait-and-see approach over the past year given uncertainties linked to turbulence in financial markets, but that now it must look forward.

He acknowledged there were different views within the ECBabout how to proceed on monetary policy, but said there was a good chance the bank would reach a conclusion rapidly.

At the same time, some companies in the services sector, where competition does not appear to be that strong, are raising prices massively.—Reuters