The Bank of England raised interest rates for the first time in more than 10 years on Thursday, but sterling slid after the central bank said it expected only ''very gradual'' further increases as Britain prepares to leave the European Union. Julian Satterthwaite reports.
(SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "The Bank of England has raised interest rates for the first time in a decade, increasing rates by a quarter of a percentage point to half a percent." Bank of England governor Mark Carney confirming that UK rates are finally on the way back up. That after a decade of cuts following the global financial crisis. (SOUNDBITE) (English) JULIAN SATTERTHWAITE, REUTERS, SAYING: "No great sense of shock here of course - the hike had been widely forecast, even Carney hinted at it. But this is unfamiliar territory in on respect. After all, the traders here have to be at least in their early 30s to have dealt with a rate hike during their working life." For consumers it may be more of a shock. Payments on mortgages, loans and credit cards all set to rise. A novel experience for about 8 million young adults. But the bank says a hike is needed as price rises creep higher: (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "Inflation is unlikely to return to its two percent target without some increase in interest rates." Economists aren't convinced. 70 percent of those polled by Reuters say sluggish growth and weak wage growth mean it's no time for a hike. This strategist says the doubters need to see the global picture: (SOUNDBITE) (English) FIXED INCOME STRATEGIST AND HEAD OF CAPITAL MARKETS AT MINT PARTNERS BILL BLAIN, SAYING: "I think that today's hike will have implications that are felt across the markets quite quickly in that we're now into a properly coordinated normalising of global interest rates. Remember it's going to happen in the States next month as well." The governor trying to keep everyone happy on Thursday. Carney reassured skeptics that any future rises would be quote "very gradual". Sterling fell back as he emphasised the cautious outlook. But with so many critics, this looks like the biggest call in his time at the helm. Carney's legacy is on the line.