INTEREST rates will rise more slowly than previously thought because of pressure from the global economy, Bank of England governor Mark Carney has said.

Mr Carney said he expected that "the next move in policy is going to be an increase" but said that since the summer factors weighing on inflation including the international slowdown had changed the likely path of rates.

The governor told the Commons Treasury Select Committee yesterday: "The combination of that means the cumulative tightening over the forecast period is likely to be less than previously thought."

He said the UK, which has seen interest rates at an historic low for more than five years and a £375 billion money-printing quantitative easing policy, was "still an economy that requires monetary stimulus".

His remarks come after the Bank's latest report on the UK economy predicted the changing economic picture meant inflation was likely to fall below 1 per cent in coming months. The governor had also said Europe was haunted by the "spectre" of stagnation.

The report cemented expectations that rates would remain on hold at 0.5 per cent until the second half of 2015. Mr Carney's comments indicate that even after this, the rate at which the cost of borrowing goes up will be slower than had been thought.

Lower oil and commodity prices as well as the strength of the pound in recent months, together with struggling wages, have kept inflation low.