The Bank of England should raise rates if the U.K. leaves the EU with a deal, said Deputy Governor Dave Ramsden on May 30.
A smooth Brexit, as assumed in the central bank's latest inflation forecast, is expected to lead to a pick-up in growth, leading to excess demand and building domestic inflationary pressure, Ramsden said.
This scenario, he said, calls for further monetary tightening to maintain monetary stability.
Ramsden added that he is "a little more pessimistic" on GDP growth than other BoE policymakers, citing more pronounced downside risks to productivity and a less upbeat outlook on investment recovery.
The BoE maintained its key interest rate at 0.75% early this month and increased its GDP growth forecasts for 2019, 2020 and 2021, assuming the bank rate will rise to about 1% by the end of the forecast period.
Prime Minister Theresa May is set to step down as Conservative party leader on June 7 after failing to find support for a fourth vote on her EU withdrawal agreement.