Mr Carney told the Treasury Select Committee the new strategy of linking interest rate rises to unemployment has given households and businesses greater "certainty and clarity".
The Bank also remains "vigilant" over a house price bubble, with prices and demand being pumped up by Government schemes.
The Bank revealed a new strategy of pinning rate rises to unemployment last month. It will not consider lifting rates from their record 0.5% low until unemployment has dropped to 7%, unless there are fears of a sharp spike in price rises.
The Bank expects this to take around three years, but markets expect the jobless total to fall more sharply.
Mr Carney said: "Overall, my view is that the announcement has reinforced recovery."
He added: "There has been a change in the pace of activity without a question. This is welcome, but we should not be satisfied with it."
Under intense questioning by MPs during a two-hour session, the former governor of the Bank of Canada repeatedly stressed that the Bank is firmly tied to its key target of keeping inflation at 2% but he said: "I'm not afraid to raise interest rates. I raised interest rates in Canada.I have not an issue with doing that if it's appropriate."
Mr Carney said the Bank's new forward guidance message has been well understood by households and business.
"When the economy is really growing, when the economy can withstand a tightening of monetary policy - that's when we will be taking action," he said.
He added while there are encouraging signs from the economy, the Bank could add to its £375 billion quantitative easing programme if Britain suffers a relapse.
Mr Carney said he has "tremendous sympathy" for savers who are seeing their nest eggs eroded by inflation but he said the Bank's job is to make sure the recovery is not a "false dawn".