The Bank of England (BoE) on Thursday hiked its key interest rate from a record-low 0.10 percent to 0.25 percent, as it seeks to combat decade-high inflation despite Omicron fears.

The decision confounded market expectations for no change and came one day after news that UK inflation rocketed in November to 5.1 percent, more than double the BoE's 2-percent target.

The BoE's monetary policy committee voted 8-1 in favor of the first interest rate hike in more than three years, but unanimously decided to maintain quantitative easing stimulus, it said in a statement.

Policymakers deemed the hike "necessary" in order to return UK inflation towards its official target level, adding that consumer price inflation in advanced economies had risen by more than expected.

They also noted, however, that the Omicron coronavirus variant, which has spread rapidly over the last month, posed downside risks to activity.

The UK economy also continues to suffer from the ongoing supply crunch, it cautioned.

The impact of the Omicron variant and pandemic control methods will push down on gross domestic product in December and in the first quarter of 2022, it added.

Rates had been slashed to a record-low 0.1 percent at the start of the pandemic in order to boost Britain's lockdown-hit economy.

However, global inflation has since accelerated sharply after the world emerged from lockdowns earlier this year, with prices soaring as companies struggled to meet demand for goods, energy and services.