The Bank of England decided to raise interest rates to 0.25 percent from 0.1 percent, causing the pound to soar as the market was taken off guard.

At a meeting on Thursday, members of the bank’s monetary policy committee voted eight to one to raise interest rates, a day after inflation hit a 10-year high, making the BoE the first major central bank to raise borrowing costs since the Covid-19 pandemic wreaked havoc on the global economy last year.

Sterling surged three-quarters of a cent versus the US dollar to its best level since November 30, while interest-rate sensitive two-year gilt rates rose by more than 7 basis points on the day to 0.56 percent, the highest level since December 1.

The move defied market forecasts of no change as the government deals with a dramatic increase in Covid-19 infections. However, it occurred only one day after the UK’s inflation rate soared to 5.1% in November, more than double the Bank of England’s objective of 2%.

“The committee continues to evaluate that there are two-sided risks around the medium-term inflation outlook,” the BoE stated. “However, some mild tightening of monetary policy throughout the projected period is likely to be necessary to attain the 2% inflation target sustainably.”

Following the statement, sterling climbed by three-quarters of a cent versus the US dollar to its best level since November 30, while interest-rate sensitive two-year gilt rates increased by more than 7 basis points on the day to 0.56 percent, the highest level since December 1.

According to the Bank of England, inflation is on course to reach 6% in April, which is three times the bank’s goal level. In a statement, it signaled that it no longer viewed inflation as a passing fad. “The labor market is tight and has continued to tighten,” the document added, “and there are some signals of higher persistence in domestic cost and pricing pressures.” “While the Omicron variation is anticipated to weigh on near-term activity, its influence on medium-term inflationary pressures is unknown at this time.”

According to a Reuters survey, the majority of analysts predicted the Bank of England to retain the Bank Rate at 0.1 percent despite a recent rise in coronavirus infections.

On Wednesday, the UK registered a record-breaking 78,610 infections.

The quick spread of the Omicron version in the run-up to Christmas and New Year’s has badly harmed consumer trust.

Because of the spread of Omicron, the Bank of England reduced its growth predictions for December and the first quarter of 2022.

Meanwhile, the Bank of England will maintain its £895 billion ($1,185 billion) quantitative easing program following a majority vote in favor.