Bank of England's Carney: It is "foolish" to cut rates to try to combat low inflation
The Bank of England governor reiterated February comments saying that the drop in prices was temporary and mostly caused by the sharp fall in oil prices.
The governor noticed he expected inflation to fall to around zero and stay there for much of the rest of the year.
In January UK inflation fell to 0.3%, marking its lowest rate on record.
"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," Mr Carney told the House of Lords economic affairs committee.
But he said the Bank was "vigilant to the possibility" that a period of low prices, such as in energy and food, could start to change consumer expectations hitting spending and wage growth.
Earlier, Monetary Policy Committee (MPC) member Ian McCafferty said the decline in oil prices was likely to dampen inflation for a long time. However, Mr McCafferty, who had consistently voted for higher interest rates before voting to keep them at their current 0.5% low, also warned that long-term low inflation could push down wage growth.
Since June 2014, the price of oil has halved, with Brent crude currently trading at $56.42.
Most analysts believe prices will
remain low for the foreseeable future, mainly due to high levels of oil output from the United States and no sign of the economic recovery from Europe.
However, the low cost of crude may also make investment in some new wells uneconomical - which means prices could rise in the longer term.
