Economic performance remains "robust", the Ifo says

Gernot Nerb told CNBC television he hoped rates would be held "for the next two or three (meetings) at least".

His comments came as the latest survey of German business confidence by the Ifo institute showed sentiment among firms falling by more than expected.

The business climate index fell to 107 in June from May's figure of 108.6.

The survey - which is based on a monthly poll of about 7,000 firms - also showed confidence in the outlook for the economy weakening.

However, the Ifo institute said the confidence index remained at a high level and indicated "robust economic activity".

Rate debate

Analysts gave a mixed reaction to the survey's results.

"We expected a fall but not such a big one," said Dirk Schumacher at Goldman Sachs. "However, this is no reason to be concerned. The level is not alarming, but rather points to continued strong growth."

However, David Brown at Bear Stearns was more pessimistic.

"We may be seeing the first signs of cracks appearing in Germany's economic spring," he said.

"The sharp drop in Germany's Ifo business sentiment is a crystal clear message to the ECB that they cannot keep sanctioning higher rates with impunity."

Earlier in June, the ECB raised interest rates for the eurozone from 3.75% to 4% - the highest level for six years.