The Bank of England (BOE) raised interest rates for the first time in more than 10 years Thursday, a landmark move after borrowing costs had slumped to the lowest level on record.

Alongside Governor Mark Carney, the majority of rate-setters at the U.K.’s central bank voted in favor of hiking the benchmark rate to 0.5 percent from 0.25 percent. The bank’s key rate is crucial for the economy as it is used to price all sorts of bank loans and mortgages.

Investors had widely expected a 0.25 percent move upwards in the interest rate, with the BOE now reversing the emergency rate cut announced in August last year in the wake of the Brexit vote.

In one of the most closely watched interest rate decisions since the financial crisis, the BOE said it projected “very gradual” further increases over the next three years.

“It isn’t so much where inflation is now but where it is going that concerns us,” Governor Mark Carney said in a news conference Thursday.

The Bank said its nine rate-setters voted 7-2 to increase its benchmark rate. As expected, the two Monetary Policy Committee (MPC) members voting to keep borrowing costs unchanged were Jon Cunliffe and Dave Ramsden. However, most rate-setters decided it was the “appropriate” time to tighten monetary policy.

“All members agree that any future increases in Bank Rate will be at a gradual pace and to a limited extent,” the BOE said in a statement Thursday.

The BOE’s decision to rate hikes Thursday sees the central bank fall in line with the U.S. Federal Reserve and to some extent the European Central Bank (ECB), which are either raising rates or beginning to scale back stimulus.

However, while the U.S. and the euro zone are enjoying solid growth, Britain’s economy has grown at its slowest pace since 2013 over the past 12 months.

“The market seems to be, in my view, making the same mistake it made earlier in the year which is focusing too much on growth and not enough on inflation,” Kallum Pickering, senior U.K. economist at Berenberg, told CNBC Thursday.

“The possibility that the Bank of England could hike more than the market’s currently expecting seems to be quite high,” he said.

Ahead of the announcement Thursday, the BOE had expressed concern that the U.K.’s economy had been overheating, with inflation soaring to a five-year high of 3 percent in September and unemployment hitting multi-decade lows. And in addressing these concerns, Carney said Thursday, “the time has come to ease our foot a little off the accelerator.”

The Bank forecast a “gently rising path” of two further 0.25 basis point increases over the next three years.

The central bank has remained ultra-accommodative in the years since the global financial crash and also introduced U.S.-style quantitative easing (QE) — buying assets to stimulate lending — which is used to stoke inflation and boost the economy.

But, the central bank strongly indicated in September that it was ready to reverse this policy of easing — more than a decade after the U.K. saw its last rate hike in July 2007.

The pound was trading at $1.3113 shortly after midday London time but was close to $1.322 just before the rate decision. It was down nearly 1 percent against the greenback for the session.