UK’s historic rate hike comes with a warning

The Bank of England announced the steepest interest rate hike since 1995 on Thursday, as it battles against soaring inflation.

The regulator increased its benchmark rate by half a percentage point to 1.75% in the sixth interest rate rise since December.

The bank also forecast a recession in the UK, warning that the economy will start shrinking in the fourth quarter of this year and will keep contracting throughout next year.

Britain's inflation soared to 9.4% in June, and according to various estimates it could increase to between 11% and 15% by early next year. Rising prices are being driven mainly by surging energy and food costs.

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