The Bank of England could lower interest rates if Brexit talks produce a disorderly outcome, Governor Mark Carney suggested in a speech on May 24.
Despite the BoE's expectations that it will raise rates, contingent on a smooth Brexit process, the bank is ready to respond to a bad deal in the same way it did following the EU referendum result, Carney said.
"To understand the [Monetary Policy Committee's] potential response, businesses, households and market participants can draw on the Committee's track record of managing the trade-off that emerged after the referendum, since exactly the same framework would apply," he said.
Following the Brexit vote, The BoE trimmed its base interest rate for the first time in seven years, cutting it to a record low of 0.25%. The bank also approved the purchase of up to £10 billion worth of corporate bonds and expanded the purchase of government bonds by £60 billion to £435 billion.
In case of a smooth transition, the bank would determine the pace of rate increases depending on the level of demand in the economy, Carney said.
