The European Central Bank may need to raise interest rates further, Austrian central bank chief Robert Holzmann said on Thursday, just as fresh figures showed euro zone inflation steadied in August, defying expectations for a drop.

The ECB has raised rates at every meeting over the past 13 months but policymakers are now contemplating a pause given a deterioration of the economic growth outlook and the risk of a recession.

Still, Holzmann, an outspoken conservative, said that he has not yet seen enough evidence for a pause and he's leaning towards a hike, even if he has not yet made up his mind.

"I have not made up a decision because I don't have all the data, but I would not exclude that I would go for a hike," he told the Reuters Global Markets Forum. "We are not yet at the highest level (for rates); it could be that we do another hike or two."

The ECB will next meet on Sept. 14. Markets are increasingly betting on a pause but still see another hike, the last in the cycle, later this year.

If the ECB's deposit rate, now at 3.75%, moved higher this year, then rate cuts could also come quicker, already next year, Holzmann argued.

"If we were to move this year to above 4% ... and inflation comes down, then we could be able, perhaps to change it already to lower rates in 2024. If that's not the case, we'll have to wait for 2025."

The big issue is that inflation remains elevated. Data showed overall price growth steady at 5.3% in August, confounding expectations for a drop.

This shows that price growth is persistent, fuelled by an exceptionally tight labour market, Holzmann said.

Holzmann also said that the ECB should soon discuss ending reinvestments in its 1.7 trillion-euro ($1.85 trillion) Pandemic Emergency Purchase Programmed earlier than the 2024 deadline.

($1 = 0.9198 euros)

(Reporting by Mehnaz Yasmin in Bengaluru; writing by Balazs Koranyi; Editing by Sharon Singleton and Kim Coghill)