European Central Bank President Jean-Claude Trichet said global central banks expect the world economy to re-gather strength after a slowdown.
"We see at the level of the global economy that growth remains positive and significant," Mr Trichet said at a briefing after chairing a meeting of central bankers from around the world in Basel, Switzerland. There will be a "slowing down" of growth followed by "some picking up", he said.
Economic growth in emerging markets such as China, India and Russia has bolstered global expansion even after a housing slump pushed the US economy close to a recession. Mr Trichet said global central banks remain committed to fighting inflation.
"We see inflation very high at a global level," he said. "We all agree that at the level of the central bank constituency, a solid anchoring in inflation expectations is of the essence for all of us in the present global environment."
In the US, the Federal Reserve has kept its key rate on hold for the past five months, while the ECB in July raised borrowing costs to a seven-year high to fight inflation.
The Organization for Economic Cooperation and Development said on September 2nd that the world's leading central banks should keep borrowing costs at their current levels to balance strong inflation with reduced expansion. The Paris-based group forecast "weak activity through the end of the year."
With the global economy losing strength, it has become more difficult for central banks to raise interest rates to fight inflation. Crude oil prices have surged 39 per cent in the past year, reaching a record $147.27 a barrel on July 11th.
"After the shocks, headline inflation will have to go back to the definition of price stability'' in each nation, Mr Trichet said. "We all consider that we have an abnormal level of" headline inflation because of "commodity prices, food prices. We have to avoid second-round effects."
Global inflation is already eroding the spending power of companies and consumers. In Japan and the 15-nation euro region, gross domestic product fell in the second quarter.
Bloomberg