The European Central Bank still has some way to go to raise borrowing costs, which should remain high for a prolonged period to keep inflation under control, according to Governing Council member Pablo Hernandez de Cos.

“The process of monetary tightening is already well advanced, although, with the information currently available to us, we still have some way to go,” de Cos said in Barcelona. “We also anticipate that interest rates will have to remain in restrictive territory for a long time to reach our target in a sustained manner.”

Considered one of the more dovish ECB rate setters, the remarks by de Cos — who heads Spain’s central bank — signal a growing consensus that regardless of its peak, borrowing costs need to remain high to bring consumer-price growth back to the central bank’s 2% target.

The ECB slowed the pace of its rate hikes to 25 basis points earlier month and markets and economists are betting on two more steps of that size in June and July. Still, several governing council members have said rates hikes could continue beyond the summer.

While underlying inflation, which excludes volatile food and energy items, remains under pressure, some indicators are starting to indicate some moderation, de Cos said, adding that falling energy prices, improving supply bottlenecks and easing demand should gradually drag prices down.

Higher rates are tightening credit conditions with surveys showing banks more reticent to give out loans to consumers and businesses, he said. The effects of elevated rates on the economy and inflation will be felt more clearly this year and peak in 2024, de Cos said.

The Bank of Spain calculates that past rate hikes will shave 0.5 percentage points off inflation in the southern European country this year and 0.6 percentage points each in 2024 and 2025. Impact on activity will be even more pronounced with higher borrowing costs dragging economic growth down by 1.1 percentage points in 2024.

Even if the economy take a hit from the historic bout of rate hikes, the ECB should stay committed to raising rates to rein in prices, de Cos told business leaders.

“The tightening process is having and will have short-term costs in terms of lower economic activity, but keeping price stability is the main contribution that the central bank can make to ensure economic growth solid long term,” he said.