ECB Sticks With Negative Rates Despite Surging Inflation, Diverging From Fed

FRANKFURT—The European Central Financial institution is probable to continue to keep its vital interest amount in destructive territory for at least a further 12 months even with surging inflation in the eurozone, signaling a divergence with central banking institutions such as the Federal Reserve that are now moving to section out simple-income policies amid promptly climbing charges.

A combination of large inflation and softening financial development is posing a dilemma for central banking institutions. They want to continue to keep their monetary stimulus in spot extensive adequate to guarantee a powerful recovery from the Covid-19 shock, but not so extensive that purchaser-value development gets unmanageable. Inflation has surged to multidecade highs in the U.S. and other nations in the latest months, driven by booming desire and supply-chain bottlenecks as economies reopen.