Nicosia - The euro zone economy may be facing a recession but rate hikes remain absolutely necessary because persistently high inflation is damaging the economy and stability, European Central Bank policymaker Gabriel Makhlouf said on Tuesday.

"The euro area is facing a difficult combination of high inflation and low economic growth, including the possibility of a technical recession," Makhlouf, Ireland's central bank governor said in Cyprus.

"History teaches us that these issues will only be exacerbated if we delay action and raising interest rates is absolutely necessary as persistent inflation is damaging to macroeconomic stability."

(Reporting by Balazs Koranyi; Editing by Jon Boyle)