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cent and putting the 2024 rate at 2.3 per cent, above its 2 per cent target.

Markets were little surprised, however, as investors had already priced a more than 80 per cent likelihood of a 75 basis-point move, even if economists polled by Reuters were more evenly split, showing only a slight majority expecting the larger move.

With the ECB statement explicitly saying more rate hikes would be needed, markets continue to expect another 50 basis points at the ECB’s October meeting.

Asked about the future direction and pace of rate changes, Lagarde said: “We didnt say ‘raise at 75’ as if 75 is the norm - it is not.”

Going into the meeting, conservatives feared that anything other than an outsized move would signal that the ECB was not serious about its inflation-fighting mandate - officially its sole objective.

That risked pushing up already high long-term inflation expectations, which would signal a loss of confidence in the ECB and raise questions about the bank’s inflation-targeting framework.

Timid action also risked weakening the euro and boosting inflation further through more expensive energy imports.

The euro has been languishing around parity against the dollar for weeks, not far from a two-decade low hit earlier this month.

That means more expensive exports of everything from oil to cars, which then raises prices for consumer.

Policymakers have also made the case for frontloading rate hikes partly to send a strong signal about the central bank’s inflation-fighting commitment and partly to get most of the hikes done before the onset of a recession becomes evident.

With high energy prices sapping purchasing power, a downturn is essentially inevitable. However, monetary policy is mostly powerless against a supply-shock driven downturn, firming the argument for hikes even if the economy suffers.

Some policymakers are now openly talking about a recession, and the ECB’s new projections also show sharply lower growth in the coming years.