The Bank of England kept its benchmark interest rates unchanged on Thursday, and hinted that a smooth Brexit could quicken the bank's rate-hiking cycle.
The BOE rate-setters voted unanimously to hold rates at 0.75 percent. In August this year, the bank raised interest rates by 25 basis points — its second time since the financial crisis.
Despite good economic data, the lack of certainty over Brexit seemed to have hit business sentiment and could bring further volatility, the bank said in a statement.
The BOE has so far acted on the basis that the EU and the U.K. will strike an agreement over Brexit.
"Were the economy to continue to develop broadly in line with the November Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate," Mark Carney, governor of the Bank of England told reporters, hinting that if a Brexit deal is achieved there could be further increases to rates.
He told CNBC's Joumanna Bercetche during the Q&A session that the market rate expectations curve leaves inflation a bit above target in year two — meaning that in the event of a Brexit agreement, there could be reasons to push rates higher than currently expected.
Carney also said that Thursday's decision and forecasts did not include the government's new budget plan. The U.K.'s finance minister Philip Hammond announced last Monday some stimulus measures. These could also prompt the BOE to raise rates.