The Bank of England has opted to push interest rates above their financial crisis lows.

However, the policy committee signaled that it was in no hurry to raise them further with an uncertain Brexit on the horizon.

The Bank's nine rate-setters were unexpectedly unanimous in their vote to raise rates to 0.75% from 0.5%. 

That was the level at which they spent most of the past decade - apart from 15 months after the Brexit vote when they were cut even lower.

The BoE said Britain's economy, while growing more slowly than in the past ahead of Brexit, was operating at almost its "speed limit," or full capacity, raising the prospect of more home-grown inflation pressure ahead. 

However, the message for interest rates remained one of gradual and limited increases as the central bank saw inflation only a fraction above its 2% target over the next few years.

With less than eight months until it leaves the bloc, London and Brussels - as well as key members of British prime minister Theresa May's Conservative Party - remain far apart on what the future trading relationship should look like.

But BoE Governor Mark Carney says that, even if Britain's economy is growing only modestly, it risks overheating unless borrowing costs rise from their crisis-era emergency lows, something the central bank began in November with its first rate hike in more than 10 years.

All bets on where BoE rates are headed will be off, however, if Britain fails to get a Brexit deal, Carney has said.

Several economists had challenged the need for a rate hike now, given not only the Brexit risks but also the potential damper on global growth from U.S. President Donald Trump's tariffs on imports, and counter-moves by other countries.

Wage growth - the main domestic driver of inflation - has been slow to pick up, too.

Pound down

The pound extended losses after the bank's interest rate move.

A broadly rallying dollar also hit the pound as Mark Carney spoke to reporters.

The move was widely expected and priced in by traders, although the unanimous decision of the BoE's nine rate-setters was not.

The market initially took that unanimity as a more hawkish-than-expected sign.

But sterling later succumbed to selling pressure and dropped 0.8% to $1.3017, down from around $1.31 before Mr Carney had given his news conference.

The pound also fell against the euro from an earlier flat position.

It dropped 0.4% at 89.150 pence per euro as Mr Carney spoke.

He reiterated that given that an uncertain Brexit was on the horizon and inflation was expected to fall towards its 2% target over the next three years, the bank would raise rates only gradually and to a limited extent.

Investors have been betting that there will be no further hikes before Britain leaves the EU in March, limiting any strength in the pound.