AFP, LONDON:  The Bank of England on Thursday raised its  main interest rate for the first time since 2007 as it tackles Brexit-fuelled  inflation, and signalled more hikes lie ahead.

Policymakers voted 7-2 to tighten borrowing costs to 0.50 per cent from a  record low of 0.25 per cent, as a weak pound caused by Brexit uncertainty has hiked the cost of imports into Britain and in turn sent inflation rising far  above the BoE’s target.

Thursday’s hotly-anticipated move mirrors policy tightening seen in the United States and eurozone as the global economy strengthens overall.

”The time has come to ease our foot off a little from the accelerator,” BoE  Governor Mark Carney told a press conference following the decision.

”While the sheer novelty of the first increase in bank rates in a decade  creates some uncertainty around its impact, there are reasons to expect it to  be no larger than usual.”

Rising interest rates tend to increase repayments for borrowers and therefore stretch household budgets—which are already being eroded by weak  wage growth and high inflation. However, they also boost income for savers.

Carney himself voted with the majority in favour of the rate hike, but two MPC members felt there was “insufficient” evidence of a recovery in wage  costs.

Sterling slid in value after the BoE cautioned that any more hikes would be very gradual.

The BoE nevertheless hinted that more increases could be on the way, saying it stood “ready to respond” should the economy require it.

And the bank downgraded the 2017 economic growth forecast to 1.6 per cent from 1.7 per cent previously.

”The decision to leave the European Union is having a noticeable impact on  the economic outlook,” the bank noted in the minutes of its regular policy  meeting.

”The overshoot of inflation throughout the forecast predominantly reflects  the effects on import prices of the referendum-related fall in sterling.”

GDP guidance for 2018 and 2019 was maintained at 1.6 per cent and 1.7  per cent expansion respectively, despite looming Brexit. The BoE had however warned in July last year that Britain could fall into recession as businesses delay investment decisions because of Brexit.

”There remain considerable risks to the outlook, which include the response of households, businesses and financial markets to developments related to the process of EU withdrawal,” it said Thursday.

The London stock market extended gains on the news, as a weaker sterling  helped the earnings prospects of exporters.