Video report by ITV News Business Editor Joel Hills
The Bank of England has hiked interest rates from 0.25% to 0.5% in the first rise for over a decade.
It also signalled more increases are on the way as it looks to cool surging inflation.
Policymakers on the bank's nine-strong Monetary Policy Committee (MPC) voted 7-2 in favour of the rise.
The move comes as the bank looks to dampen Brexit-fuelled inflation, which it predicts will now peak at around 3.2% this autumn.
Bank of England Governor Mark Carney said that Brexit is weighing negatively on the economy as businesses are having a "wait and see" attitude to investment.
Millions of borrowers on variable rate deals will be impacted by the rates decision, which will add around £15 a month to the cost of the average mortgage, while it will offer some relief to savers hit by surging inflation and negligible returns.
ITV News Business Editor Joel Hills gives his thoughts on the future of interest rates in the UK
Many millions of Britons have never experienced an interest rate rise in their adult lives, with borrowing costs languishing at historic lows since the 2008 financial crash.
The Bank's quarterly inflation report also suggested two more rate hikes were likely over the next three years to return inflation back to its 2% target, which could see rates hit 1% by the end of 2020.
The rate hike comes as the Bank cut its forecast for growth to 1.6% for 2017 from the 1.7% previously predicted.
However it held growth forecasts at 1.6% for 2018 and 1.7% for 2019.
Bank of England Governor Mark Carney explains the rise
The decision comes after Mr Carney repeatedly warned in recent months that it may be "appropriate" to hike interest rates as Brexit-fuelled inflation looks set to rise further.
But a quarter point rise has only reversed the cut seen in the aftermath of the Brexit vote shock in 2016 as the Bank sought to head off turmoil in the economy.
Experts believe the voting result on the Bank's rates committee and the commentary in its quarterly inflation forecast report will be key to whether the hike is likely to mark the start of a series of interest rate rises.
Edward Park, investment director at investment manager Brooks Macdonald, expects the Bank to pause after the predicted November hike.
"With the UK consumer still heavily indebted, via both mortgages and credit, at the same time as there is a real wage squeeze, we don't think the near term outlook warrants materially higher rates," he said.
The Bank is tasked with returning inflation back to its 2% target since the Brexit-hit pound has sent prices racing higher.