His comments came after Ian McCafferty, the latest appointee to the Bank of England's rate-setting monetary policy committee called on George Osborne to continue with his austerity programme.
Mr Miles is a leading proponent of quantitative easing whereby the Bank of England injects money into the economy by buying Government debt. So far it has bought £375 billion of gilts.
Delivering the Scottish Economics Society annual lecture, Mr Miles insisted the money had not been trapped in the banking sector. "One can argue about how effective all this has been in offsetting the recessionary impact of the financial crisis," he said.
However, he insisted an increase in reserves held by banks at the Bank of England was not a sign the new money was doing no good.
Mr Miles said last night that when it came to reversing its current loose stance, aimed at boosting the economy, the Bank should choose to put up interest rates first. He said this would allow the Bank to reverse its stance quickly again if necessary and be less disruptive.
"Reversing the trajectory of gilt holdings would create unnecessary volatility in the market for gilts," he added.
Any rise in Base Rates is likely to be followed by increased mortgage rates for homeowners.
Mr McCafferty joined Mr Miles as one of four external members on the MPC at the beginning of the month.
He told MPs the MPC needed to be "mindful" that tightening of monetary policy by the raising of Base Rates or the selling gilts could have a significant impact on consumers, given current low interest rates.
Mr McCafferty views consumer spending as a key risk to the UK economy.
In a written submission to the Treasury committee he cautioned that recent increases in the prices of raw materials, including oil "may lead to inflation falling rather more slowly" than expected and squeeze consumer spending.
However, he also showed some wariness about loosening monetary policy further.
Mr McCafferty said that the factors such as the extra bank holiday for the Jubilee had introduced "significant uncertainty" about the state of the economy, which he said is probably flat rather than declining.
"I would like to see more evidence before I was to make any decision on whether QE needs to be extended more or not," he said.
Mr McCafferty, who was chief economic adviser to employers' group the Confederation of British Industry since 2001 before joining the Bank, told MPs: "I come to the MPC as an independent analyst, not a lobbyist for business."
He said of Chancellor of the Exchequer George Osborne: "I think he needs to maintain the austerity programme, otherwise there are risks we will see disruptions in financial markets."
The Government has come under pressure to change its approach after the UK sank back into recession in the last quarter of 2011.