ECB must end bond reinvestments once their job is done -Nagel

LUCERNE, Switzerland (Reuters) - The European Central Bank needs to keep raising interest rates and should also stop bond purchases when they have fulfilled their purpose, Bundesbank President Joachim Nagel said on Friday.

With inflation in the euro zone approaching 10%, the ECB raised rates at the fastest pace on record in recent months and promised more hikes into next year, hoping to stop the rapid price growth from becoming entrenched.

Nagel backed those plans in a speech but also voiced support for rolling back some of the unconventional measures, such as replacing maturing bonds with new ones.

While the ECB is not buying new debt, it continues to reinvest the billions of euros maturing each month in its 5 trillion euros' ($4.86 trillion) worth of bond holdings.

"I think it is important that we end our special measures quickly when they have done their job," Nagel said, in a lecture at the University of Lucerne, Switzerland.

Reinvestments in a 3.3 trillion euro Asset Purchase Programme are due to run indefinitely but a growing number of policymakers want to cut these holdings and a debate on letting some papers expire is expected to start next month.

Nagel did not take a view on the size of an October rate hike but said rates must rise even if this dampens growth.

"The fight against inflation comes with burdens," he said. "It is likely to dampen growth temporarily."

"But doing nothing and letting things run their course is not an option," he said. "Inflation eats away at wealth... and hits the weakest hardest."

($1 = 1.0284 euros)

(Reporting by John Revill, writing by Balazs Koranyi, editing by Susan Fenton)