The European Central Bank has raised interest rates across the eurozone by a record margin to combat soaring inflation that has reached double figures in some of the currency bloc’s 19 member countries. Setting aside concerns that higher rates would add to the current squeeze on consumers’ disposable incomes and increase the depth of a looming recession, the central bank’s 25-member governing council raised its key benchmarks by an unprecedented 0.75 of a percentage point to 1.25%. The move follows a similar increase by the US Federal Reserve and is expected to put pressure on the Bank of England to follow suit when its policymakers meet next week to review the UK’s monetary policy. The ECB announced its first increase in rates in 11 years at its previous meeting in July, raising rates by a half-point. Its benchmark is now 1.25% for lending to banks. The Fed’s main benchmark is 2.25% to 2.5% after several large rate rises, including two of three-quarters of a point. The Bank of England’s key benchmark is 1.75%. Rising eurozone inflation, which reached a record rate of 9.1% last month amid rocketing natural gas prices, has forced the ECB to tear up its usual rule book of incremental increases. Christine Lagarde, the president of the ECB, indicated the central bank was ready to announce further rate hikes to tackle high inflation and bring it down to its 2% target. “We have a goal, we have a mission. We have incredibly high inflation numbers, we are not on target in our forecast and we have to take action,” she said. “What we know is that we want to get that 2% medium-term target and we will take the necessary steps along the way in order to get there. We think that it will take several meetings to get there.” Altaf Kassam, the head of European investment strategy at State Street Global Advisors, said the increase was “inevitable” after a surprise jump in the headline rate of inflation in August. The growth in prices fell in France to 5.8% from 6.1% in July, but increased in most other eurozone countries. “The ECB had to respond forcefully to criticism of falling behind the curve, especially with the worry that second-round effects were starting to taking hold,” he said. “This hike was also about putting a floor under the euro, and keeping a lid on the extra imported inflation its weakness had brought.” Concerns that workers would push for inflation-busting wage rises have largely proved unfounded but officials at the central bank have said they are concerned that without a determined response to rising inflation, unions would put in higher pay claims over the coming months. The euro has tumbled in recent months to parity with the dollar, increasing the cost of imports and adding to the pressure on broader prices growth. Willem Sels, the global chief investment officer at HSBC’s private bank, said the ECB was torn about the decision when higher interest rates would make it more difficult for firms to pay debt interest costs and invest in new ventures, deepening the recession. “The ECB and other central banks have been torn between the need to crush inflation and their realisation that recession risks continue to increase. “So markets were unsure whether the ECB would raise by 0.5% or by 0.75%. By opting for 0.75%, the ECB took the more hawkish option, in line with the more hawkish tone central banks have been sending since the Jackson Hole meeting of central bankers in late August.” The gathering of central bank governors in Jackson Hole, Wyoming, last month was characterised by commitments to tackle inflationary pressures despite forecasts of recession. The US Fed boss, Jerome Powell, said the Fed’s “overarching focus right now is to bring inflation back down”, adding that the Fed would continue to use its tools “forcefully” until prices were under control. “We must keep at it until the job is done,” he said. Some sceptics accused the ECB of overreacting despite lagging behind major central banks. “There is a major risk that this determined approach by the ECB will not only lead to lower growth and employment than now but lower than needed to tame inflation,” wrote Erik F Nielsen, the group chief economics adviser at UniCredit Bank. “Increasing concern about their reputation could lead the ECB and possibly the Fed as well to overdo the monetary tightening,” he added. “We still find it hard to see how aggressive rate hikes can bring headline inflation down in the eurozone,” said Carsten Brzeski, the chief eurozone economist at ING bank. “The economy is far from overheating and will almost inevitably fall into a winter recession, even without further rate hikes.”