The European Central Bank has raised interest rates for the first time in 11 years by a larger-than-expected amount, joining steps already taken by other major central banks across the world to target stubbornly high inflation.

The move, announced on Thursday, raises new questions about whether the rush to make credit more expensive will plunge major economies into recession at the cost of easing prices for people spending more on food, fuel and everything in between.

The ECB’s surprise hike of half a percentage point for the 19 eurozone countries is expected to be followed by another increase in September, possibly of another half a point. The bank’s President Christine Lagarde had indicated a quarter-point hike last month.

The European Central bank will raise its interest rates until inflation falls back to its 2% target, the ECB’s President Christine Lagarde said in an interview with Germany’s Funke Mediengruppe published on Friday.

It was Lagarde’s strongest commitment to date to fighting inflation, which hit 8.6% in the euro zone last month, despite growing fears of a recession in the bloc as a result of Russia’s invasion of Ukraine.

Raising rates is seen as the standard cure for excessive inflation. The ECB’s benchmarks affect how much it costs banks to borrow — and so help determine what they charge to lend.

But by making credit harder to get, rate increases can slow economic growth, a major conundrum for the ECB as well as for the Federal Reserve. The Fed raised rates by an outsized three-quarters of a point in June and could do so again at its next meeting. The Bank of England started the march higher in December, and even Switzerland’s central bank surprised with its first increase in nearly 15 years last month.

The goal for all central banks is to get inflation back down to acceptable levels — for the ECB, it’s 2% annually — without tipping the economy into recession. It’s difficult to get right as central banks reverse what has been a decade of very low rates and inflation.

“The most precious good that we can deliver and that we have to deliver is price stability. So we have to bring inflation down to 2% in the medium term. That is imperative,” Lagarde said. “And it’s time to deliver.” 

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