The Bank of England has increased interest rates by 0.25 percentage points – the first rate rise since 2007.
Millions of mortgage borrowers face an increase in their monthly repayments after the decision by the Bank’s Monetary Policy Committee (MPC).
The increase in the Bank rate to 0.5% was widely expected but marks a watershed moment after years of rock-bottom borrowing costs.
Experts estimate eight million Britons have never seen an interest rate rise.
Policy makers cut the Bank rate to a historically low 0.5% in 2009 to try to help nurse the economy back to health at the height of the global financial crisis.
It was then cut again last summer in the aftermath of the Brexit vote, to 0.25%.
The decision to hike comes in the face of sluggish growth and warnings from some experts that it should be delayed to avoid further risking the economy.