ECB President Signals Gradual Rate Hikes Despite Stubbornly High Inflation

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European Central Bank President Christine Lagarde said the bank would raise interest rates gradually over the coming months, veering from a global push toward faster rate increases as inflation broadens and intensifies around the world, the Wall Street Journal reported. Speaking at the ECB’s annual economic policy conference in Portugal on Tuesday, Ms. Lagarde said Europe’s inflation problem was deepening, but warned that the region also faced weaker growth prospects related to the war in Ukraine. She said the ECB would increase its key rate by 0.25 percentage point next month, to minus 0.25%, and possibly by a larger amount in September, confirming plans first unveiled last month. The ECB’s caution underscores a divergence with other major central banks including the Federal Reserve, which is expected to increase its policy rate by 0.75 percentage to a range of 2.25% to 2.5% next month. Inflation has risen above 8% in both regions. Some investors had expected Ms. Lagarde to announce faster interest-rate rises on Tuesday. Central banks in Australia, Canada, New Zealand, Switzerland and Norway have recently announced 0.5-percentage-point interest-rate increases. Read more. (Subscription required.)