Echoing downbeat comments from central banks around the globe, BoE chief Mark Carney warned that global growth was only modest at best with risks rising as emerging economies struggle, holding back Britain despite its domestic resilience.

Highlighting risks from China's economic rebalancing, more capital flows, tighter financial conditions, and increased market volatility, Carney said risks to Britain were rising.

"All of these developments pose downside risks to growth in the United Kingdom via trade, financial and confidence channels," Carney told a news conference.

"The outlook for trade is particularly challenging with net exports expected to drag on UK growth over the forecast period."

With global market turmoil increasing, emerging markets struggling and oil prices collapsing, central banks around the globe have pared back growth and inflation expectations, openly discussing the need for more accommodation, erasing hopes that policy normalization could start later this year.

The Bank of Japan last week cut rates into negative territory, the ECB hinted at a further cut in March while dovish comments from New York Fed Governor William Dudley overnight suggested that no U.S. rate hike could come at all this year.

Britain has stood out from Europe's economic weakness with relatively healthy growth, little spare capacity and a jobless rate near the long term equilibrium, raising expectations that Britain would soon follow the Fed's December hike.

"NEXT MOVE IS UP"

Global turmoil dashed those hopes but Carney said the next rate move is still likely to be a hike rather than a cut as the current market rate path implied a slight overshoot of the inflation target.

"We'll do the right thing at the right time on rates," he said. "More likely than not, the next move is up."

The central bank said its Monetary Policy Committee had voted 9-0 this week to keep rates on hold at a record-low 0.5 percent, where they have been for almost seven years.

Asked if he stood by repeated remarks that the next rate move is likely to be up rather than down, he said: "Absolutely. The whole MPC stands by that."

MPC member Ian McCafferty, who had voted for a rate rise since August, unexpectedly dropped his call.

Sterling lost ground against the euro and British government bonds briefly rallied against euro zone debt on the prospect of a more distant British interest rate rise.

The BoE forecast Britain's economy would grow 2.2 percent this year and 2.3 percent in 2017, down from forecasts of 2.5 percent and 2.6 percent in November and barely changed from 2015, when growth disappointed expectations.

Consumer price inflation is forecast to stay below 1 percent through 2016 -- longer than previously thought -- but then is forecast to rise to just over 2 percent in two years' time, similar to the last set of forecasts.

Carney added that the sterling's recent fall, the resilience of the financial system and solid growth in both household and corporate consumption supported the British economy, indicating the domestic economy could withstand increased global stress.

Sterling has weakened by more than 3 percent over the past three months. The BoE said this reflected concerns about global growth, lower interest rate expectations and possibly uncertainty about Britain's referendum on leaving the European Union, which is likely to take place in the middle of this year.