BoE's Carney says rate cut would have led to above-target inflation

An interest rate cut from the Bank of England, as many investors had expected, would have led to inflation being above the central bank's target in a few years' time, Governor Mark Carney said on Thursday.

The BoE kept rates on hold at its January meeting, citing signs that Britain's economy had picked up since December's election.

As recently as a last week, financial markets had pointed to a greater chance of a rate cut.

"There's a reduction and then a pick-up in the market curve that we have used for the forecast," Carney told reporters after the decision.

"That ... leads to inflation being slightly above target at year three, so not consistent with the remit."

(Reporting by Andy Bruce, editing by Estelle Shirbon)