A spike in food and oil prices has made the threat of inflation more acute, leading central banks said on Monday, but they warned tightening of policy in response will not proceed at the same pace.
Jean-Claude Trichet, speaking as chair of talks on the global economy at a Bank for International Settlements meeting, said the latest rise in oil prices heightened a warning he sent on inflationary pressures in January, though so far the global economy was set for relatively robust growth.
Additional tensions that have been observed in the price of oil and energy are giving an additional importance to the message we had in January to the global economy as a whole, Trichet said.
We are all devoted to continue anchoring solidly inflation expectations, that doesn't mean we take the same decisions.
A shock warning by European Central Bank President Trichet last week that it could raise euro zone interest rates next month highlighted differences with the looser stance of the U.S. Federal Reserve, driving the euro sharply higher.
Atlanta Federal Reserve Bank President Dennis Lockhart on Monday said U.S. monetary policymakers should not rule out further bond purchases if things worsen -- pointing to its continuing concern over economic growth.
Inflation concerns are pushing world stocks <.MIWD00000PUS> away from their 30-month highs set last month and expectations of a rise in euro zone interest rates have driven the euro to a four-month peak above $1.40.
Global food prices measured by the United Nations hit a record high in February, driven by rising grain costs and tighter supply, while U.S. crude oil prices hit fresh 2-1/2 year highs due to worries over supply disruption in Arab producers.
Trichet said different policies did not mean some central banks were abandoning their commitment to stable prices.
There is unity of purpose and that this is crystallising in the goal of solidly anchoring inflation expectations, Trichet said.
Oil price growth causes a significant temporary bump in inflation but it has to rise significantly to have a material impact on world economic growth, which is still expected to reach a healthy 4 percent this year.
Reuters calculations show world GDP growth will halve to 2.1 percent in 2011 from current projections only if Brent crude oil reached $150 a barrel, a 27 percent increase from Monday's prices.
(Reporting by Natsuko Waki, Catherine Bosley and Sakari Suoninen; editing by Patrick Graham)