Carney’s warning speech at Mansion House sparked a downturn in sterling with the pound falling to a one-week low against the dollar at $1.2675, down from $1.275.
It also fell 0.5% against the euro to 87.4p.
The speech from the Bank of England’s governor followed news that Kristin Forbes, one of the three members of the bank’s monetary policy committee to vote for a rate rise recently, will step down and be replaced by a more dovish Silvana Tenreyro.
In the speech, Carney said “mixed signals” from spending and business investment as well as subdued inflationary pressures and “anaemic wage growth” meant now was not the time to adjust rates.
Instead, he said: “In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.”
He added he had no power to alter the likely negative impact of Brexit on the UK economy, and that soon “we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption”.
