Bank of England governor Mark Carney has recently begun to speak more positively about the United Kingdom economy again, which led to the 0.25% hike to 0.75% today.
But Carney said there was a wide range of outcomes for Brexit - most of which would require rates to be at least as high as now - and that the central bank was working on the assumption that there would be a smooth transition.
BOE officials voted unanimously to raise the central bank's policy rate to 0.75% from 0.5% following the rate-setting Monetary Policy Committee's August meeting, the BOE said Thursday.
The move brings interest rates to their highest level since March 2009, when they were slashed from 1% to the emergency low of 0.5% in an effort to contain the fall-out from the financial crisis.
Policymakers at the Bank said that momentum in the economy had recovered after an initial dip in the first three months of the year, which was believed to be caused by... Additionally, CPI inflation was also pushed above its 2% target to 2.4% in June.
It became an even closer call after survey figures on Wednesday signalled a weaker performance from the manufacturing sector in July.
According to the Nationwide Building Society, anyone on a standard variable rate will see an increase of £12 on a mortgage of £100,000 and on a £200,000 mortgage, £25.
Meanwhile, reverse repo, the rate at which the central bank borrows money from commercial banks within the country, was adjusted to 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent.
"We think markets are right to anticipate that the MPC will wait until May 2019 to raise Bank Rate again".
Bank deposits at Rs 114.8 lakh crore grew by 0.5 percent during April 1- July 18 compared with a contraction of (-) 1.5 percent growth in the corresponding period past year.
"Fuelled by intense competition from newer banks, the fixed rate bond market has notably improved since the last base rate rise in November".
Analysts at Morgan Stanley offer detailed insights on what to expect at today's trio of key Bank of England (BOE) events, including the monetary policy statement, minutes of the meeting and quarterly inflation report (QIR).
What will an increase mean for households?
Most UK homeowners are on a fixed interest rate mortgage, and won't see an immediate increase to their payments.
However, existing home loan borrowers will not be immediately affected as they will continue to pay their existing interest rates until next reset date of their loan arrives. Throughout his tenure as governor, Carney has faced accusations of being a so-called "unreliable boyfriend", frequently promising rate hikes and then ultimately failing to deliver.
It also seems unlikely the United Kingdom will return to interest rates of 5% and above any time soon.
"They can expect a rise to their savings, albeit a small one".
"Unlike in the savings market where providers are slightly slower to react to a base rate rise, borrowers on their provider's SVR will feel the effect of the increase much more quickly".