The Bank of England has raised interest rates by a quarter of a percentage point to 4.25% in response to higher than expected UK inflation and signs that Britain’s economy is holding up better than feared.

In a fortnight of heightened unease across global financial markets, the Bank’s monetary policy committee (MPC) voted by a majority of seven to two to increase the base rate for the 11th time in a row.

It came after an unexpected jump in the UK inflation rate in February to 10.4%, from 10.1% in January, fuelled by food prices increasing at the fastest pace in 45 years. The Bank’s official target for inflation is 2%.

The pound rose against the dollar as financial markets moved to anticipate one more quarter-point increase at the MPC’s next meeting in May. However, economists said a 12th and final rate increase to 4.5% hung in the balance amid signs that inflation would fall sharply over the coming months.

The Bank of England said it was closely monitoring the economic effect of the turbulence in the banking industry, adding that it would issue a full assessment in its next update on the economy in May.

Bailey said he did not believe the global economy was facing a repeat of the 2008 financial crisis, adding that he was confident the banks in the UK were in a much stronger position than 15 years ago.

Two of the MPC’s external members, Silvana Tenreyro and Swati Dhingra, voted against a rate rise, saying higher borrowing costs were weighing on the economy in a way that could bring forward the point at which rate cuts would be required.