FRANKFURT—The European Central Bank raised interest rates by a quarter percentage point to a record high, choosing to press ahead with its fight against persistent inflation despite concerns that it could tip the eurozone into recession.

European Central Bank President Christine Lagarde said the bank would likely raise interest rates in July and keep them high for some time, signaling that the ECB still has a way to go to tame high inflation. Speaking at the ECB’s annual conference in Portugal, Lagarde warned that recent economic shocks were still working their way through Europe’s economy, “making the decline in inflation slower and the inflation process more persistent.” The comments underline an emerging policy divergence...

SINTRA, Portugal—Bank of Japan Gov. Kazuo Ueda said on Wednesday that he sees signs that the country’s inflation rate is heading toward target but isn’t yet confident enough to change monetary policy. If the central bank becomes more convinced that inflation will be sustainably higher heading into 2024, that would be a good reason to change monetary policy, Ueda said in a panel discussion at the European Central Bank’s annual policy conference in Portugal. Japan’s...

The European Central Bank is headquartered in Frankfurt. Photo: HEIKO BECKER/REUTERS FRANKFURT—The European Central Bank nudged up interest rates by a quarter percentage point, contrasting with the Federal Reserve as it extended its campaign against high inflation despite the currency area having entered a recession.

The central banks of the U.K., eurozone and Switzerland increased interest rates by 0.5 percentage point, following the Federal Reserve in slowing the pace of increases as inflation edges lower across advanced economies. The European Central Bank said in a statement it would raise its key rate to 2% from 1.5%, as expected, the highest level since 2009. In a hawkish twist, the ECB said it expected “to raise [rates] significantly further, because inflation remains far too high and is projected...