Interest rate increases could be “more frequent” than expected if the economy performs as the Bank of England is expecting, governor Mark Carney says.
But if there is a resolution to the Brexit impasse, and inflation and growth continue to pick-up, then more increases are likely, Mr Carney said.
As expected, the Bank kept interest rates on hold at 0.75% at its latest policy meeting.
Interest rates have been at that level since last August, when the Bank raised them by a quarter of a percentage point.
The Bank is expecting growth and inflation to pick up over the next two years.
In a news conference, Mr Carney said: “If something broadly like this forecast comes to pass… it will require interest rate increases over that period and it will require more, and more frequent interest rate increases, than the market currently expects.”
The Bank’s forecasts are based on a “smooth adjustment” to any new trading relationship with the European Union.