The GDP update shows Britain's economy has reached a key milestone in its recovery from the pandemic, but the Omicron outbreak poses a new threat.
The move made the BoE the first major central bank to hike borrowing costs since the start of the pandemic.
Economists said the Bank of England is in a tough spot, having to weigh decade-high inflation against the new Omicron coronavirus variant.
The UK's labor market strengthened in October, potentially easing concerns at the Bank of England about the risks of raising interest rates.
Global markets wobbled after data showed US inflation is running at its hottest since 1990, sending investors into safe havens like gold and dollars.
Like other economies, the UK is grappling with supply problems and soaring prices that are worrying businesses and households.
Strong tech earnings offset the effect of a surge in bond yields to March 2020 highs, as investors rapidly priced in rate rises to beat inflation.
UK inflation slowed in September largely due to a measurement quirk, economists said. It's expected to shoot higher before the year is out.
The UK economy's recovery has slowed in the third quarter after a rapid rebound earlier in the year.
The stronger-than-expected UK GDP figure will have been closely watched by the Bank of England.
The Bank of England's decision came as the UK confronts a surge in natural gas prices that has put a number of energy providers out of business.
Inflation shot well above the Bank of England's target of 2% in August as the economy reopened.
Economists said global supply-chain disruptions are making themselves felt in the UK economy, which was also hit by rising COVID-19 cases.
"Despite July's fall, we still expect inflation to reach about 4.5% by November," said Ruth Gregory of Capital Economics.
The UK economy is bouncing back, but companies in sectors such as hospitality and entertainment are struggling to find staff.
UK GDP grew 1% in June, the Office for National Statistics said, more than the 0.8% economists had expected.
The UK hospitality sector sharply increased its hiring in June after COVID-19 restrictions were loosened in May.