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European Central Bank president Christine Lagarde takes part in a news conference in Frankfurt, Germany, on Oct. 28, 2021.KAI PFAFFENBACH/Reuters

The European Central Bank is very unlikely to raise interest rates next year as inflation remains too low, European Central Bank president Christine Lagarde said on Wednesday, pushing back on market bets for a move as soon as next October.

With inflation running at a 13-year-high, markets are increasingly betting that the ECB will retreat from its ultraeasy monetary policy and raise rates next year for the first time in more than a decade.

“In our forward guidance on interest rates, we have clearly articulated the three conditions that need to be satisfied before rates will start to rise,” she told an event in Lisbon.

“Despite the current inflation surge, the outlook for inflation over the medium term remains subdued, and thus these three conditions are very unlikely to be satisfied next year.”

Ms. Lagarde’s comments come after she failed last week to push back market expectations and investors even briefly priced in two rate hikes in 2022.

But investors appeared to be paying attention this time and pricing for the next move, a 10 basis point increase, was pushed back on Wednesday from next October to December, 2022.

Yields also fell across the board, as did the spread between German and Italian debt, a crucial indicator for the ECB.

Spanish central bank chief Pablo Hernandez de Cos, an influential voice on the rate-setting Governing Council, echoed Ms. Lagarde’s message, arguing that market pricing was out of sync with the forward guidance.

“Market interest rates have risen over the past weeks, mainly as a result of greater market uncertainty about the inflation outlook, spillovers from abroad to policy rate expectations in the euro area, and some questions about the calibration of asset purchases in a postpandemic world,” Ms. Lagarde said.

She also pushed back on the recent rise in yields, warning that the ECB will continue to use emergency asset purchases to keep borrowing costs down.

“An undue tightening of financing conditions is not desirable at a time when purchasing power is already being squeezed by higher energy and fuel bills, and it would represent an unwarranted headwind for the recovery,” Ms. Lagarde said.

The ECB and financial investors have been at odds over the likely path of inflation, the single most important metric guiding policy, in part because the ECB itself is unsure about inflation.

“Our assessment is that the current inflationary surge is mainly due to factors of a transitory nature, although these factors could show a higher degree of persistence than initially estimated, so that we expect to continue to see relatively high rates of inflation in the coming months,” Spain’s Mr. de Cos added.

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