UK’s historic rate hike comes with a warning

The Bank of England hikes its benchmark rate and warns of an impending recession

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.

READ MORE: Sanctions on Russia could leave Britain without fish’n’chips

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.

For more stories on economy & finance visit RT’s business section