FRANKFURT - The European Central Bank (ECB) lifted interest rates by a half-point and pledged another such move, before officials then take stock of where borrowing costs must go to tame inflation.

Policymakers, as expected, raised the deposit rate to 2.5 per cent, the highest since 2008. They warned that the most aggressive bout of monetary tightening in ECB history is not done – even as energy prices plunge and the United States Federal Reserve moderates the pace of its own hikes.

“The Governing Council intends to raise interest rates by another 50 basis points at its next monetary policy meeting in March,” said the ECB in a statement. “It will then evaluate the subsequent path of its monetary policy.”

The move effectively locks in an increase in rates, while allowing for a potential pause if deemed appropriate due to improving economic conditions.

Thursday’s announcement follows a slew of encouraging economic data, showing a further retreat in inflation and receding chances of a recession in the 20-member euro zone – despite the war still raging at its doorstep.

It has been a busy week for central banks. As well as Wednesday’s decision by the Fed to lift rates by a smaller, quarter-point increment, the Bank of England (BOE) delivered another half-point hike on Thursday.

BOE raised interest rates for the 10th time in a row on Thursday, but dropped its pledge to keep increasing them “forcefully” if needed and said inflation had probably peaked.

Softening their forecasts of recession in 2023, BOE’s nine interest rate-setters voted 7-2 to increase the official Bank Rate to 4 per cent – its highest since 2008 – from 3.5 per cent. The move had been expected by most investors and economists. BLOOMBERG