Carney: Cutting interest rates would be foolish

Inflation fell to 0.3% in January while economists are anticipating deflation in the months ahead, but Carney, speaking at the House of Lords economic affairs committee, attributed falls to a slump in the global oil price, which has halved since June.

Carney said: “The thing that would be extremely foolish would be to try to lean against this oil price fall today [and] try to provide extra stimulus to try to get inflation up at this point in time.

"The impact of that extra stimulus ...would happen well after the oil price fall had moved through the economy and we would just add unnecessary volatility to inflation. That would be foolish.”

But the governor added that the Bank is “vigilant to the possibility” of low inflation resulting in lower spending and stagnating wage growth.

Carney said: “We're going to bring inflation back to target within two years... and we think that bringing inflation back over the horizon is consistent with a gently rising path of interest rates."