Market right to see rate increases, ECB's Nowotny-report

* Timing, size of further rate rises depends on economy

* ECB to have to revise inflation forecasts for euro zone

* Greek debt restructuring to have "negative side-effects"

FRANKFURT, April 17 (Reuters) - Market forecasts estimating the European Central Bank will raise its benchmark interest rate another 50 basis points this year are "well founded," ECB Governing Council member Ewald Nowotny told the Bloomberg news agency.

"I don't want to comment on specific numbers, but the tendency is well understood. The exact timing is a matter to be decided according to the economic situation," Nowotny said in an interview in Washington.

"It's obvious that we have to take price movements very seriously," Nowotny said. "We will of course have a revision of our forecast" on inflation, he said.

The ECB's staff forecasts euro zone inflation would overshoot the central bank's target this year, before falling back to below the 2 percent upper limit in 2012.

Trichet said in early March that staff expected inflation to be 2.0-2.6 percent in 2011 and between 1.0 and 2.4 percent in 2012, for a mid-point of 1.7 percent that year. [ID:nLDE72114P]

Addressing widespread concerns that Greece's debt is not sustainable, Nowotny warned any restructuring would be "very harmful and not efficient," since it could have "negative side-effects on the banking system both in the country concerned and in other countries."

NORMALIZATION MODE

In a separate interview, Nowotny told Market News International that the euro zone economy can cope with the current euro exchange rate.

"We have seen quite a substantial appreciation of the euro recently. It is not yet at a level that would have negative effects on the economy," said Nowotny, who also heads the Austrian central bank.

"I don't think that (the current euro rate) is harmful but it has to be observed."

The euro has risen more than 8 percent against the dollar this year and topped $1.45 last week for the first time in 15 months.

The ECB raised its main interest rate earlier this month for the first time since July 2008. It still provides banks with unlimited amounts of cash in its liquidity operations.

"The ECB in general is in a mode of normalization. So in that case this refers both to interest rates and to liquidity provisions," he was quoted by Market News as saying. (Reporting by Sakari Suoninen, additional reporting by Christiaan Hetzner in Berlin; Editing by Bernard Orr)