People walk past the Bank of England in London, Britain, Oct 17, 2017. [Photo/Agencies]

LONDON - The Bank of England has raised its key interest rate for the first time in a decade as it seeks to dampen down inflation largely stoked by last year's Brexit vote.

In a statement Thursday, the bank said its rate-setting body had increased the benchmark rate to 0.50 percent from the record low of 0.25 percent.

Rate-setters were faced with a dilemma during their deliberations. Though inflation is running a full percentage point above their target rate of 2 percent, the British economy has come off the boil since the vote to leave the European Union. There are worries it could be further hobbled if the British government fails to agree on a post-Brexit trade deal with the other 27 EU nations.

Britain is due to leave the EU in March 2019.

The Bank of England is poised to raise its main interest rate for the first time in a decade to keep a lid on a rise inflation caused by Brexit.

The bank is expected Thursday to lift its main rate by a quarter percentage point from the record low of 0.25 percent. That would be its first hike since July 2007, just before global credit markets started to freeze up ahead of the full-blown global financial crisis.

The main motivation would be to rein in inflation, which is above the target of 2 percent by a full percentage point. Inflation has spiked since the pound fell following last year's vote to leave the European Union. The economy, however, is growing only slowly and a rate hike could hurt it further.

Reuters