Carney noted that despite choosing to hold the Bank Base Rate at 0.75 per cent there were still plenty of reasons to remain cautious about the UK economy – and that the next rate move could be in either direction.
He added that the Brexit process had made a significant negative impact with quarterly growth in 2019 averaging only 0.25 per cent, around half the average in the previous three years.
Business investment rose just 1.25 per cent since the 2016 referendum, significantly below the 12 per cent average seen in the rest of the G7 over the same period.
Overall, UK growth last year was the weakest since 2010.
Writing in his annual report to the Treasury Select Committee, Carney said: “Throughout the past year, my view – shared by majority of the [MPC] – has been that the recovery in confidence and activity would be sufficiently strong without additional support from monetary policy.
“I therefore voted consistently to maintain Bank Rate at 0.75 per cent and the stock of purchased assets at £435bn at each meeting.
“At the MPC’s most recent meeting, however, my decision to hold policy was more finely balanced.”
Carney explained that while the UK economy lost further momentum towards the end of 2019, data received in January just before the MPC’s meeting was more positive.
“Reflecting these positive developments, I continued to judge that it was appropriate to maintain policy,” he said.
However, Carney, who is set to be replaced by current FCA chief executive Andrew Bailey this month, issued a note of caution.
“To be clear, these are still early days, and it is less of a case of so far so good, than so far, good enough,” he continued.
“It will be important for the hard data on activity to follow through on the recent pickup in the surveys, and for domestic price inflation to strengthen.
“Though the global economy looks to be recovering, caution is warranted. Evidence of a pickup in growth is not yet widespread. And any one of the known risks, such as a renewal of trade tensions, could reverse recent progress.”
The outgoing governor noted that the MPC expectations did not include provision for any measures in the upcoming budget and added: “Further ahead, if the economy recovers broadly in line with the MPC’s latest projections, some modest tightening of policy may be needed to maintain inflation sustainably at the two per cent target.”
The Bank of England is also working in partnership with educational organisations to develop teaching materials on the economy and managing money that are suitable for primary school teachers and children.
It aims to launch this education resource, named Money and Me, in time for the 2020 summer term.