(Bloomberg) -- The European Central Bank lifted interest rates by a half-point, with President Christine Lagarde saying another such move is almost certain next month, despite conceding that the inflation outlook is improving.

Policymakers, as expected, raised the deposit rate to 2.5%, the highest since 2008. Lagarde warned that the most aggressive bout of monetary tightening in ECB history isn’t done — even as energy prices plunge and the Federal Reserve moderates the pace of its own hikes.

In a statement on Thursday, the Governing Council said it “intends” to raise rates by another 50 basis points at its March meeting, then “evaluate the subsequent path of its monetary policy.”

With the 20-nation euro zone now looking likely to dodge a recession, and data this week showing consumer-price gains softening for a third month, Lagarde called risks to the growth and inflation outlook more balanced, touting the continent’s unexpected resilience.

The picture will become clearer in March with the ECB’s latest quarterly economic projections. They’ll account for the recent pullback in energy prices, which has come thanks to a warm winter and despite the war still raging on the bloc’s doorstep.

While conceding that the ECB’s intention to raise by another half-point next month isn’t “irrevocable,” Lagarde insisted it’s still very likely to transpire.

“I can’t think of scenarios, unless they were quite extreme, where that would not happen,” she told reporters in Frankfurt. “Our determination to reach 2% medium-term inflation should not be doubted. Nor should be doubted the fact that once we are in restrictive territory we will want to stay there sufficiently.”

What Bloomberg Economics Says...

“The European Central Bank has committed to another 50-basis-point increase in March, but left room for a change in increment with a policy path evaluation coming in May. That’s consistent with the Bloomberg Economics view that after another 50-bp hike next month, declining core inflation will permit a downshift to 25 bps for a final hike in May.”

—David Powell and Jamie Rush. Click here for full REACT

Lagarde also underscored that hikes are likely to persist beyond next month, echoing the message from Fed Chair Jerome Powell a day earlier.

“We know that we have ground to cover,” she said. “We know that we are not done.”

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Investors weren’t convinced. Euro-area bonds extended gains on speculation that the pace of monetary tightening will slow. Money markets added to bets for a half-point increase in March though trimmed wagers on the peak of the tightening cycle to below 3.5%.

Alongside its commitment on rates, the ECB also gave more details on how it intends to shrink its €5 trillion ($5.4 trillion) bond portfolio, reaffirming a monthly cap of €15 billion between March and June on maturing debt that’s allowed to expire.

Read more: ECB Publishes More Details of Quantitative Tightening Plan

It’s 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 delivered another half-point hike earlier today.

Even after a steeper-than-anticipated slowdown in January, euro-area inflation — at 8.5% — remains more than four times the ECB’s 2% target. What’s more, a measure of underlying price pressures is stuck at a record. 

Stubborn core inflation has prompted hawks like Netherlands central bank chief Klaas Knot and Austria’s Robert Holzmann to speculate whether half-point steps should persist into the second quarter — especially as higher borrowing costs are yet to hurt the economy noticeably.

But doves on the Governing Council, who include Italy’s Ignazio Visco and Greece’s Yannis Stournaras, have signaled a preference for more gradual steps.

--With assistance from Bryce Baschuk, James Regan, William Horobin, Alessandra Migliaccio, Ben Sills, Joel Rinneby, Kristian Siedenburg, Jeremy Diamond, Greg Ritchie, Jasmina Kuzmanovic, Alexander Pearson, Angela Cullen, Alexey Anishchuk, Christoph Rauwald and Laura Malsch.

(Updates with Bloomberg Economics after seventh paragraph.)

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