The central bank for the 20 countries that share the euro also raised its forecasts for inflation, which it now expects to come down more slowly towards its 2% target over the next two years, while cutting those for economic growth.

That illustrated the dilemma ECB policymakers had faced: prices are still rising at more than twice the target rate but with high borrowing costs and a downturn in China, overall economic activity is struggling.

Against this backdrop, the ECB sent a message that its rate hikes were probably at a end, prompting euro zone bond yields and the euro to fall and European shares to rise as investors bet that it would start cutting rates next year.