london dec 16 reuters  the bank of england raised its main interest rate to 025 on thursday as inflation pressures mounted in britain surprising some market players who had expected another onhold decision amid rising covid infections read more  rates rose to 025 pushing sterling 08 higher  sending 10year bond yields to the highest since december 3 and lifting uk bank shares almost 4 ftnmx301010 below is the reaction from analysts to the latest move my initial thoughts are one of surprise given that they failed to raise rates in november and they clearly appear to have regretted that decision given that inflation has surprised to the upside and jobs numbers were good still the wage numbers suggest fears of second round effects form inflation are a bit overdone its especially surprising given the new wave of the pandemic clearly their communication is a bit to be desired and there are significant downside risks to activity from the latest wave of the pandemic the market had largely priced out a hike this a surprise given the recent omicron onslaught investors in large part had come around to the idea the bank would delay hikes into 2022 the pound should remain firm on this move caught in a perfect catch22 situation where it will be criticised for hurting an uncertain recovery if it hikes rates and for letting inflation run loose if it does not hike the bank of england chose the hardest path this was not what markets expected making it the second time in two months that the boe blindsides investors with consequent volatility in bond and fx markets the pound gained markedly after the decision it is certainly a sign of decisiveness that the mpc preferred to act now instead of playing it safe the hike in rates by the boe was largely unexpected however the 81 vote suggests that the committee is more worried about inflationary pressures than possibly the market has been anticipating particularly given that the growth forecast for q4 has been revised downwards although the boe is saying the decision was finely balanced given omicron the 81 vote suggests otherwise given that the market was largely expecting a nochange decision questions may again be raised about the effectiveness of the boes communications policy todays decision from the bank of england while small in isolation will make pockets shallow and purses tight when combined with other financial challenges it doesn’t put people on the best footing as they head into 2022 after a long stretch of unmoving interest rates banks will waste little time in implementing their own rate increases removing many of the cheapest mortgage deals from the market reporting by london finance and markets team compiled by sujata rao