The BoE move follows the U.S. Federal Reserve's decision on Wednesday to raise its key rate by three quarters of a percentage point. The Swiss National Bank earlier on Thursday also hiked rates by 75 bps.

MARKET REACTION:

FOREX: Sterling fell, trimming earlier gains and was last trading at $1.1288, still up 0.2% on the day.

BONDS: British gilt futures rallied on the move, but yields across the government bond curve remained close to multi-year highs hit earlier in the day.

STOCKS: UK bank stocks fell sharply before recovering some ground. They were last flat on the day while the blue-chip FTSE stock index was last down just 0.2% on the day.

COMMENTS:

CHRIS IGGO, CIO FOR CORE INVESTMENTS, AXA INVESTMENT MANAGERS, LONDON

"The announcements made by the government this week will actually mean we get a lower peak in inflation than would have otherwise been the case.

"So, if the Bank of England is taking that into account then it is a slightly bullish that they didn't do 75, only did 50."

FRANCES HAQUE, SANTANDER UK CHIEF ECONOMIST

"As expected, the Monetary Policy Committee (MPC) raised Bank Rate to 2.25% at its meeting today. Given GDP data for July was underwhelming, retail sales growth is now falling, and consumer confidence is at historic lows, this shows households are already reducing spending to deal with the cost-of-living increases.

"Although inflation will continue to rise over the next month due to the small increase in the energy price cap in October, the peak will be significantly lower than envisaged by the MPC at its previous meeting."

HUGH GIMBER, GLOBAL MARKETS STRATEGIST, JPMORGAN ASSET MANAGEMENT, LONDON:

"I think it (the split on the decision) highlights a committee that is unclear about the path ahead. It looks from the first scan of the summary that the committee placed quite a lot of weight on some of the weaker economic data we had recently.

"But the UK economy needs a period of economic weakness to get inflation under control.

"I'm quite surprised that the bank didn't take this opportunity to go 75 basis points, particularly given the cover from some of the other global central banks. The pound looks particularly vulnerable here if the bank stays behind the curve.

"The UK economy has one of the most difficult mixes of growth and inflation in the G7. Until (investors) get more comfort that this mix of fiscal and monetary is the right medium-term one, I'd expect the pound to keep falling against the dollar and the euro."

(Reporting by the London Markets Team, Editing by Dhara Ranasinghe)