Bank of England governor Mark Carney suggests Boris Johnson's decision to back Brexit prompted slide in pound

Boris Johnson's decision to support the leave campaign came ahead of a slump in the pound to seven-year lows in February

Mark Carney, governor of the Bank of England, appeared before MPs on the Treasury Select Committee on Tuesday

Mark Carney, the governor of the Bank of England, has said that Boris Johnson's decision to back the leave campaign in the upcoming EU referendum "concentrated market minds" on the dangers Brexit, which contributed to a massive fall in the value of the pound.

Boris Johnson's decision to support the leave campaign came ahead of a slump in the pound to seven-year lows in February.

Carney appeared before MPs on the Treasury Select Committee on Tuesday to answer questions about the Bank of England's position on the EU referendum.

MPs asked Carney what could happen to inflation if sterling slides.

Carney said that inflation could rise, which would create a challenge for the Monetary Policy Committee when it comes to setting the interest rate. But he countered that by saying a reduction in consumption could also see inflation fall.

"An adjustment in sterling – a notable depreciation – creates a challenge for the Monetary Policy Committee because the committee would have to take into account the adjustment in the lower exchange rate," he said.

"But we would have to take into account the reason for it. If it is because uncertainty, it could be affected by a reduction in consumption at the same time that could have a downward affect on inflation and we would have to balance the two," he said.

The Bank of England has said it could pump billions of pounds into Britain's financial system if the UK votes to leave the EU in the referendum on June 23.

The UK's major banks could be offered cash around the time of the EU referendum to keep the financial system afloat, the bank said, following fears that the pound could lose as much as 20 per cent of its value if the UK votes to leave.

Sir Jon Cunliffe, the deputy governor for financial stability, told the MPs on the Treasury Select Committee that similar plans had been considered around the time of the Scottish independence referendum and that the bank had learned that it was better to reveal the plans in advance, to avoid any further drops in the pound.