Official figures from the Office for National Statistics show the economy shrank 0.1% in the three months to June, and has continued to contract.
Members of the Monetary Policy Committee now believe the economy continued to shrink by 0.1% in the quarter to September. The Bank had previously expected the economy to grow during the period.
That would would push Britain into a technical recessions – defined as two straight quarters of economic decline.
It comes as Threadneedle Street delivered its biggest rate hike since November 2008 on Thursday, after raising rates to a 27-year high in its previous meeting.
Markets had been betting the central bank would follow its US counterpart and lift rates by a larger 75 basis points, but the Bank settled on a move dovish course.
The (MPC) decided to raise rates to 2.25% – their highest since November 2008 – from 1.75%, in an effort to grapple big increases in the cost of living.
Policymakers also voted unanimously to reduce quantitative easing by £80bn over the next 12 months to £758bn.
In committee minutes, it said the "tight labour with wage growth and domestic inflation" above targets called for a "forceful response".
Separate analysis from the ONS point to wages falling behind price rises, with unemployment at record lows, and employers struggling to fill vacancies.
The Bank is lifting rates in a bid to bring inflation, currently running at 9.9%, back to its 2% target.
In the September meeting, the MPC said inflation is now not due to soar as high as previously expected after government announced plans to freeze energy prices for households earlier this month.
In its previous meeting in August, it had warned that prices would likely peak at 13.3% and the country would witness five consecutive quarters of recession.
However, Consumer Price Index (CPI) inflation is now set to peak at "just under 11%" in October, marking the highest inflation the nation has witnessed since January 1982.
Alice Haine, personal finance analyst at Bestinvest, said: "The Monetary Policy Committee’s 5-4 vote in favour of the 0.50% hike sends a strong signal that the Bank is serious about getting inflation back down to more palatable levels in the medium term, with three members voting for a more aggressive 0.75% hike, as it looks to curb the worst bout of inflation in 40 years and edge closer to its target of 2%.
"Prime minister Liz Truss’ energy plan has taken some of the heat off the Bank as the fiscal move to freeze utility bills at £2,500 for two years for the typical household and extra help for businesses could reduce the inflation peak by several percentage points leading to a milder than expected recession. But it has not solved all the central bank’s woes."
The Bank said that uncertainty in the outlook for energy prices has fallen after the government announced it would cap bills at £2,500 for the average household for two years.
Business secretary Jacob Rees-Mogg announced on Wednesday that the government will slash business energy bills in half, in a bid to prevent firms collapsing over the winter period.
UK chancellor Kwasi Kwarteng is set to deliver a mini-Budget on Friday, setting out details of help for households and businesses amid the cost of living crisis.