The European Central Bank left rates unchanged today, but the Bank of England seemingly surprised everyone with a 25 basis point rate hike — a move that may represent a warning to global markets.

At today’s meeting, the Governing Council of the ECB decided that the minimum bid rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 3.50%, 4.50% and 2.50% respectively.

However, the Bank of England’s Monetary Policy Committee voted to raise the official Bank Rate paid on commercial bank reserves by 25 bps to 5.25%.

“In the United Kingdom, output continues to rise at a firm pace. Domestic demand has grown steadily and credit and broad money growth remain rapid. The international economy continues to grow strongly,” it said by way of explanation.

“Sterling has risen and oil prices have fallen back. But the margin of spare capacity in the economy appears limited, adding to domestic pricing pressures,” the Bank added. “CPI inflation was 2.7% in November. It is likely that inflation will rise further above the target in the near term, but then fall back as energy and import price inflation abate. Relative to the November Inflation Report, the risks to inflation now appear more to the upside.”

The Bank last hiked rates in early November 2006, but this latest move came as a surprise. According to a research note from Stewart Hall, market strategist with HSBC Securities (Canada) Inc., not one of the 52 participants in a Bloomberg survey were calling for a rate hike in the UK.

“Interesting to note that one of the issues cited was the continued rapid growth in money along with upside risks to inflation. That bathtub of global liquidity that markets have been bathing in is figuring larger in central bank commentary,” Hall adds, noting that it has featured in recent comments by Chicago Fed president Michael Moskow and ECB president Jean-Claude Trichet.

“Tight corporate spreads, emerging markets that no longer price like emerging markets and flat yield curves globally generally attest to the abundance of capital looking for a home. The evolutionary like draw down of this liquidity which may be associated with persistent rate hikes out of central banks globally may be the very catalyst that many are looking for as the global market spoiler,” he says. “Its evolutionary nature, would provide it with its stealthy nature.”

National Bank Financial also observes the significance of today’s decision, saying, “Central banks around the world continue to mop up excess liquidity.”

It says that as a result of this surprise decision, the real global policy rate (nominal rate minus CPI inflation) now stands at a seven-year high. “Central banks will need to thread carefully in the coming months as they now run the risk of putting too much emphasis on their respective domestic measures of spare capacity,” NBF cautions.

“Inflation at the global level remains extremely tame because of ample capacity in China and other developing countries. With fewer petrodollars flooding the fixed-income markets and the continued willingness of Chinese authorities to limit credit expansion, we may have reached the point where financial markets will start to feel the pinch of incremental rate hikes,” it adds. “Next on deck for a tightening in the coming months are the European and Japanese central banks.”

While the ECB left rates unchanged today, as was widely anticipated, Hall reports that market chatter suggests a February rate hike as the next probable move out of the ECB.