He also said the bank would tolerate slightly higher inflation than its formal target if necessary.
“Our job is not to target the exchange rate, our job is to target inflation,” Mark Carney said during a public meeting in Nottingham.
“But that doesn’t mean we’re indifferent to the level of sterling. It does matter, ultimately, (for) inflation and over the course of two to three years out, so it matters to the conduct of monetary policy,” he said.
Sterling briefly rose on Mr Carney’s comments, giving it a little relief after falling nearly 20% against the US dollar since the referendum because of concerns among investors that Britain’s economy will suffer from Brexit.
That rally petered out, however, with the UK currency later trading lower against the dollar, at $1.18, and at 90.2 pence against the euro.
The Bank of England has previously signalled it is likely to cut interest rates below their already historic low of 0.25% in order to help the economy cope with the shock of the Brexit vote.
But since those signals from the bank, the pound has extended its slump which is likely to further push up the price of imports and Britain’s inflation rate.
The Bank of England’s next announcement on rates is due on November 3.
The plunge in the value of sterling against the euro has taken centre stage for many Irish exporters since the June vote because they fear they will make heavy losses selling goods and services across the Irish Sea, in the short term.
Sterling was trading as recently as late last year around 70 pence against the euro. It has slid from 76 pence since the eve of the June 23 vote.
Alan McQuaid, chief economist at Merrion Capital, however, predicted sterling would unlikely fall to parity with the euro next year because of looming national elections in France and Germany.
Deputy Bank of England governor Ben Broadbent, speaking at a separate public meeting, said the fall in the value of the pound was important for inflation, but the Bank of England had to look at many factors.
Mr Carney said he was willing to allow inflation to run “a bit” higher than the central bank’s 2% target in order to help employment and allow Britain’s economy to grow.
British inflation is expected to rise above 2% in 2017 because of the sharp fall in the value of the pound.
At the same time, the economy is expected to slow.
“We’re willing to tolerate a bit of an overshoot in inflation over the course of the next few years in order to avoid (rising unemployment), to cushion the blow and make sure the economy can adjust as well as possible,” Mr Carney said.
The meetings are part of work by senior Bank of England officials are doing to explain the work of the bank to the general public.
Mr Carney said the inflation environment in Britain was “going to change,” making things more difficult for the country’s most vulnerable households.
Speaking at a third public meeting in the city of Leicester, another deputy Bank of England governor, Minouche Shafik, said the world economy faced very high levels of uncertainty, partly due to high geopolitical risks.