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ECB firmly plans.

European Central Bank policymakers stood firmly behind plans to keep raising interest rates even if that pushes the bloc into recession and stirs political resentment as fresh data pointed to higher than feared inflation. The ECB doubled its deposit rate to 1.5% on Thursday and promised more tightening in the months to come in a bid to prevent sky high price growth from getting entrenched, rebuffing a round of government criticism that it was exacerbating the downturn. "It will go even higher in December and the first months of next year," ECB policymaker Peter Kazimir said on Friday. "We will cross the neutral rate -- regardless of where anyone currently sees it -- like a runaway train," Kazimir, Slovakia's central bank chief, said in unusually hawkish comments.

The flurry of ECB comments came just as fresh data pointed to inflation being even higher than feared. The bank's own Survey of Professional Forecasters, a key input in policy deliberations showed inflation, now running at almost 10%, holding above the ECB's 2% target indefinitely and only falling to 2.4% by 2024. Fresh inflation figures out of Germany, France and Italy on Friday all exceeded forecasts with only Spain coming in under expectations, suggesting price growth in the bloc as a whole likely accelerated, confounding expectations for a drop. Italian inflation soared to 12.8% in October, Germany hit 11.6% while French inflation was 7.1%, all well above forecasts.

The string of data and ECB comments kept markets volatile on Friday. Investors now see ECB rates peaking at around 2.75%, above levels near 2.5% seen on Thursday after the ECB's rate hike and language tweaks. But the peak was priced at over 3% just days ago, indicating that investors remain unsure just how high rates need to go to tame inflation. Yields on ten-year German government bonds, a benchmark for the bloc, jumped 13 basis points, erasing nearly all of Thursday's fall.

The ECB's survey predicted economic growth would total just 0.1% next year and there would be three quarters of negative growth starting with the third quarter of 2022, producing a cumulative decline of 0.7%. But ECB chief Christine Lagarde pushed back on the criticism on Thursday, arguing that breaking inflation was the ECB's chief mission and governments could help by providing targeted support for the most vulnerable. "Consumer sentiment in Europe is at an all time low," Chief Financial Officer Graeme Pitkethly told reporters, warning of fears of a "confluence of events" with energy prices and inflation rising and households' savings waning.

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