BRUSSELS - The European Central Bank may need to raise interest rates again in September and possibly beyond unless it sees a substantial fall in underlying inflation, Belgian central bank chief Pierre Wunsch said on Friday, after the bank raised rates for the eighth time in a row.

The ECB lifted its deposit rate to 3.5% on Thursday and essentially committed to another move in July but left the door open to subsequent increases, even as markets started to quickly price in a hike to 4% in either September or October.

"If we see a substantial decrease (in core inflation,) then we won't hike, but if we don't see the decrease, then ... we could hike in September, and even more," Wunsch told reporters.

"If core keeps at around 5% on a yearly basis in the coming months, then we will increase beyond September," he added.

Underlying inflation, which filters out volatile food and fuel prices, was 5.3% in May and some policymakers see only a slim chance for a fall in the coming months as a strong tourism season is going to keep services prices under pressure.

Wunsch also said part of the drop in core inflation in May was due to a big discount in German transport costs and that, excluding this one-off, it would have been stable.

"If we look at the smoothed monthly numbers, they have been around 0.4% a month for over a year," he said. "We don't really see a beginning of slowdown there."

Wunsch, among the first policymakers to warn about the euro zone's inflation problem, months ago said the ECB's deposit rate may need to go to 4%, a figure considered unrealistically high at the time.

"I said a few months ago that I would not be surprised if we would hit 4% and that was on condition of core remaining high - and that's what we've been seeing," Wunsch said.

(Reporting by Julia Payne; writing by Balazs Koranyi; Editing by Kevin Liffey)