With new inflation figures due out Friday, Lagarde said the bank is using the dual approach to be able to respond to economic uncertainty.
Oil prices are up 10% in barely a week on supply constraint concerns with Brent crude holding near $117 levels pushing Canadian and Australian dollar up 0.3% and 0.4% respectively versus the greenback
Government borrowing costs have soared on the 19-country currency bloc's periphery
ECB had an unscheduled, emergency meeting earlier on Wednesday to address higher borrowing costs for many European govts
The euro jumped almost 0.75% to $1.0487 pushing the dollar index off a 20-year high in the process.
ECB President Christine Lagarde has lately also turned more hawkish than she previously indicated, and the Reserve Bank of Australia is among those raising rates faster than policy makers had signaled
Investors have now lost 10.1 per cent this year on euro high-grade corporate bonds, Bloomberg debt indexes show
The ECB now sees inflation over its 2 per cent target throughout its projection horizon, accepting that rapid price growth is not nearly as temporary as it had forecast for the past year
The bank is making a sharp turn from supporting the economy during the COVID-19 pandemic to squelching inflation that has hit record levels in the 19 countries that use the euro.
The European Central Bank confirms its intention to hike interest rates at its policy meeting next month and downgraded its growth forecasts
Spot gold was down 0.3% at $1,847.90 per ounce as of 0956 GMT and US gold futures had declined 0.3% to $1,850.50.
With inflation at a record-high 8.1% and broadening quickly, the ECB has already flagged a series of moves, hoping to stop rapid price growth from morphing into a hard-to-break wage-price spiral.
The Sensex closed at 54,892, with a decline of 215 points, or 0.4 per cent, and the Nifty finished at 16,356, with a drop of 60 points, or 0.3 per cent
A decidedly hawkish pivot could help convince bears that policy makers are determined to tighten financial conditions despite the headwinds
The Federal Reserve is on track for half-point interest rate increases in June and July, and last week's solid jobs report boosted expectations of continued tightening by the US central bank.
Reserve Bank of Australia raised rates by most in 22 years and flagged more tightening to come as it battles to restrain surging inflation, driving a brief spike in the Aussie and hitting local shares
Spot gold was up 0.1% at $1,851.98 per ounce, as of 0752 GMT, while US gold futures rose 0.2% to $1,854.60.
The European Central Bank meets on Thursday, though it is not expected to begin raising interest rates until July, with rate setters at the US Federal Reserve and Bank of England gathering next week
Markets, which have already priced in several ECB rate increases and the end of bond-buying stimulus, want more clarity on what comes after.
Asian shares made a muted start as caution gripped ahead of a critical reading on US inflation, while the euro gained on the yen amid wagers the ECB will take a major step toward policy tightening