The United Kingdom's central bank hiked its key interest rate by a whopping 0.75 percent on Thursday in its latest attempt to tame the rampant inflation that has contributed to the country's worst cost-of-living crisis for decades.

The Bank of England's decision to push its interest rate up from 2.25 percent to 3 percent was aimed at encouraging people to save instead of spend, in order to edge inflation back down from its current 10.1 percent toward the bank's 2 percent target.

The rise was the largest the UK had seen since 1989 and takes the interest rate to its highest level since 2008.

The bank also said it believes the UK will soon enter its longest recession since the depression of the 1930s, with economic contraction likely to continue for two years and with unemployment set to double.

Sky News said analysts at Deutsche Bank said the UK's economy is entering "a deeper and more prolonged recession" than previously expected.

The BBC quoted the UK's finance minister, Chancellor of the Exchequer Jeremy Hunt, as saying the bank had no choice but to act.

"Inflation is the enemy and is weighing heavily on families, pensioners, and businesses across the country," he said.

The bank's nine-member monetary policy committee has now delivered eight back-to-back interest rate hikes since December, when the rate was only 0.1 percent.

Karen Ward, chief strategist at JP Morgan Asset Management and a member of the Treasury's economic advisory council, told The Times newspaper a smaller interest rate hike would have triggered a new round of market selling.

Experts said the rise will further calm financial markets in the wake of the disastrous mini-budget former chancellor of the exchequer Kwasi Kwarteng unveiled in September.

But critics said the rate rise will push up the cost of mortgages by several hundred pounds and cause real hardship.

Clare Moriarty, head of the Citizens Advice Bureau, said on Radio 4's Today program: "Mortgage lenders do have to consider how they can help people in financial difficulties. This might be by payment deferrals, or removing additional fees and charges."

She said the bureau, which offers free legal advice, is urging people in difficulty to talk to their lender.

The rate hike will also push up the cost of credit card debt, car loans, lines of credit, and other loans.

Rachel Reeves, the opposition Labour Party's spokesperson on the economy, said it means "families with already stretched budgets will be hit by higher mortgage payments" and that there will be "higher financing costs for businesses".

"For many firms who have had a tough couple of years, this will mean desperately difficult decisions about whether to carry on," she added.

The value of the pound fell immediately after the Bank of England's announcement, by 1.4 percent, to 1.123, against the US dollar, and by 0.8 percent against the euro.

But the UK is not alone in making significant recent rate hikes. On Wednesday, the United States' Federal Reserve raised its rate by 0.75 percent. Last week, the European Central Bank pushed its interest rate up by 0.75 percent and said more rises will follow.