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* FTSE 100 down 1.0%, FTSE 250 off 0.7%
June 22 (Reuters) - British stocks dropped at the open on Thursday amid a broad-based decline as investors mulled the prospect of a higher-than-expected interest rate hike by the Bank of England following still-high inflation data.
The benchmark FTSE 100 was down 1.0% at 0711 GMT, touching a three-week low, while the FTSE 250 mid-cap index lost 0.7%.
Healthcare, miners and banks were the biggest drag on the FTSE 100, down over 1% each.
Traders' bets were almost evenly split between a 25 basis point (bps) and 50 bps hike by the BoE later in the day, after data on Wednesday showed inflation defied predictions of slowing down and held steady at 8.7% in May.
Markets also increased bets on further hikes following the data that revealed underlying inflation is at its highest level since 1992.
Investors fretted about the BoE's ability to curtail inflation through rapid rate hikes without sparking a recession.
Meanwhile, U.S. Federal Reserve Chair Jerome Powell's congressional testimony hinted at the likelihood of further rate hikes to curtail inflation. (Reporting by Ankika Biswas in Bengaluru; Editing by Sonia Cheema)
