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Christine Lagarde, President of the European Central Bank listens during a news conference in Frankfurt, Germany, on July 21. Michael Probst/The Associated Press The head of the European Central Bank said Monday she does not believe inflation has peaked after reaching the highest levels on record. ECB President Christine Lagarde also told European lawmakers that the bank isn’t through raising interest rates to combat those price spikes. There is too much uncertainty to know whether inflation, which hit 10.6% in October, would come down soon in the 19 countries that use the euro currency, Lagarde said. When looking at what is driving inflation, “whether it is food and commodities at large, or whether it is energy, we do not see the components or the direction that would lead me to believe that we have reached peak inflation and that it is going to decline in short order,” she said. That means the central bank will “continue to tame inflation with all the tools that we have,” primarily...

The European Central Bank building, in Frankfurt am Main, Germany, on Dec. 15. DANIEL ROLAND/AFP/Getty Images The European Central Bank eased the pace of its interest rate hikes on Thursday but stressed significant tightening remained ahead and laid out plans to drain cash from the financial system as part of a dogged fight against runaway inflation. After being wrong-footed by sudden price rises, the ECB has been raising rates at an unprecedented pace. Inflation has soared since economies reopened after the COVID-19 pandemic, driven by supply bottlenecks and then surging energy costs following Russia’s invasion of Ukraine. In a move shadowing similar steps this week by the Federal Reserve and Bank of England, it raised the rate it pays on bank deposits by 50 basis points to 2 per cent, moving further away from a decade of ultra-easy policy. That decision, which was expected, marked a slowdown in the pace of tightening from 75-basis-point increases at each of the ECB’s two previous m...

European Central Bank policy-makers Luis de Guindos and Yannis Stournaras on Thursday joined a chorus of euro zone central bankers supporting more euro zone interest rates increases at the pace of last week’s hike to tame inflation. The ECB raised its key interest rates by 50 basis points seven days ago and President Christine Lagarde signalled as many as two more hikes of the same magnitude after acknowledging that inflation would not to fall to the ECB’s 2 per cent target until the end of 2025. De Guindos, the ECB’s vice-president, said “increases of 50 basis points may become the new norm in the near term” and last for a “period of time” despite a shrinking economy. “If we do nothing, the situation would be worse because inflation is one of the factors behind the current recession,” he told French newspaper Le Monde. De Guindos also said he was concerned that markets could underestimate the persistence of inflation and that they might consider current easy fiscal policy to be inco...

European Central Bank president Christine Lagarde speaks during the 53rd annual meeting of the World Economic Forum, in Davos, Switzerland, on Jan. 19. LAURENT GILLIERON/The Associated Press The European Central Bank pushed back on Thursday against market bets that it would slow the pace of its interest rate hikes given recent falls in inflation and easing pressure to keep up with policy moves by other central banks. Traders had recently trimmed their expectations for how much the ECB would raise borrowing costs, comforted by data showing lower inflation in both the euro zone and the United States and related talk of smaller hikes by the U.S. Federal Reserve. But ECB President Christine Lagarde and fellow policy maker Klaas Knot said investors were underestimating the ECB’s determination to bring inflation in the 20-nation euro zone back to its 2 per cent target, from 9.2 per cent last month. “I would invite them to revise their positions,” Lagarde said during a panel conversation in...

IMF managing director Kristalina Georgieva attends a session at the World Economic Forum annual meeting, in Davos, Switzerland, on Jan. 17. FABRICE COFFRINI/AFP/Getty Images The year ahead looks better than feared for the global economy but remains fraught with risks including escalation of the conflict in Ukraine and the emergence of a transatlantic trade war, the World Economic Forum’s final panel concluded. International Monetary Fund (IMF) Managing Director Kristalina Georgieva told the Davos audience that what had improved was the potential for China to boost growth and that the IMF now forecast Chinese growth of 4.4 per cent for 2023. While that was likely to prompt the IMF in coming days to upgrade its current forecast of 2.7 per cent growth for the year ahead, she cautioned against expecting any “dramatic improvement” on that figure. One risk tied to China’s re-opening, with its potential to heat up global demand and prices for energy, was that it triggered a new wave of infl...