THE European Central Bank yesterday said it could soon increase interest rates, raising concerns about the implications for struggling eurozone countries as European Union leaders strive to find a solution.

If the central bank were to raise interest rates to stem inflation, possibly as early as next month, it would push up the costs of borrowing across the 17-country eurozone, increasing the cost of funding for highly indebted countries such as Greece, Ireland, Portugal and others on the eurozone periphery.

ECB President Jean-Claude Trichet was explicit in a news conference after the bank decided to keep interest rates on hold at a record low 1 percent, saying: "An increase in interest rates at the next meeting is possible."