Christine Lagarde warned markets not to expect an early end to rate rises next year, on a day when the European Central Bank and the Bank of England lifted borrowing costs to their highest levels in 14 years.
The two central banks raised interest rates by 0.5 percentage points, following an equivalent increase this week by the US Federal Reserve. In comments that reflected the challenge many central banks are facing in wrestling down inflation, BoE governor Andrew Bailey said the UK’s tight labour market and rises in wages and prices justified “a further forceful monetary policy response”.
Lagarde, ECB president, said the central bank had “more ground to cover, we have longer to go”, than the Fed. “The ECB is not pivoting,” she added, promising at least two more 0.5 percentage point rate increases in February and March.