The interest rate was raised to 2.25%, the highest level since the 2008 financial crisis.
The Bank of England’s half-point rise followed a three-way split in the vote.
Financial markets generally expected the Bank to follow US Federal Reserve last night with a rise of 0.75 percentage points, but economists were slightly more cautious.
The Bank signaled on Thursday that it is now more concerned about the outlook for economic growth.
He warned the country could already be in a technical recession, saying his staff now believed the UK was on track to record a second consecutive quarter of negative growth.
He had predicted last month that the economy would expand by 0.4% between July and September.
But he said the additional bank holiday for the day of the Queen’s funeral could now contribute to a negative growth figure for the three-month period.
The minutes of the Bank’s Rate Setting Committee contained good news; that support for the government’s energy bill would now mean that inflation would not rise in October as much as initially expected.
He thought the consumer price measure would come in at just under 11% from the current 9.9%.
The bank’s latest forecast called for a figure above 13%.
The easing of short-term inflation expectations was also seen as a factor behind the decision not to opt for a larger rate hike.
However, the 0.50 percentage point rise is still putting intense pressure on borrowers, such as mortgage holders, as variable rates and new fixed rate loans continue to head north.
The Bank’s action is aimed at tackling core inflation – which excludes more volatile items such as oil and energy prices – which continues to rise in the midst of the cost of living crisis.
The main measure of the Consumer Price Index (CPI) fell in august but that was only thanks to falling fuel prices over the previous month.
The bank fears that other elements of inflation, spikes in the cost of goods and services in general, are becoming more entrenched.
Policymakers said they would continue to “react forcefully, if necessary” to tackle inflation.
While any action to contain the pace of rising prices will be widely welcomed by the government, financial markets are likely to question not only the speed of the Bank’s tightening, but also the administration’s approach. Truss to stimulate economic growth through tax cuts and energy measures. invoice household and business bailouts.
Investors are worried about future government borrowing levels.
The rates charged to hold UK government bonds have risen steadily to 11-year highs in recent weeks, while the pound is at a 37-year low against the dollar, although much of the decline reflects the strength of the US currency.
It lost some of the interim gains made earlier in the day against the dollar, but was still trading at $1.13 (£1) following the Bank’s remarks.
On Friday, Chancellor Kwasi Kwarteng will give more details of the government’s budget plans, which could amount to more than £150billion of stimulus.
The bank said it would assess the implications of this, for monetary policy, at its November meeting.