Bank of England Governor Mark Carney gave a speech about the central bank's decision to raise interest rates for the first time in more than a decade.
Investors and analysts widely anticipated a rise in rates; markets priced in a 90 percent possibility of a hike prior to the decision.
In September, the U.K. central bank said a rate hike was likely to be needed in "coming months."
Rate-setters voted 7-2 in favor of hiking the benchmark rate to 0.5 percent from 0.25 percent.
"It isn't so much where inflation is now but where it is going that concerns us," Carney said at a news conference following the announcement.