The European Central Bank has raised its key interest rates by an unprecedented 75 basis points and signaled further hikes, prioritizing the fight against inflation even as the bloc’s economy is heading for a likely winter recession, Report informs referring to Reuters.

With inflation at a half-century high and approaching double-digit territory, policymakers are worried that rapid price growth could become entrenched, eroding the value of household savings and setting off a hard-to-break wage-price spiral.

Following up on its July rate hike, the ECB raised its deposit rate to 0.75% from zero and lifted its main refinancing rate to 1.25%, their highest levels since 2011, with further moves anticipated in October and December.

"Price pressures have continued to strengthen and broaden across the economy and inflation may rise further in the near term," the ECB said in a statement.

"This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to the ECB’s 2% medium-term target," the ECB added.

Indeed, the ECB raised its inflation projections once again, lifting the 2023 outlook to 5.5% from 3.5% and putting the 2024 rate at 2.3%, above its 2% target.