The Bank of England has been accused by MPs of behaving like an unreliable boyfriend, giving mixed messages on when the first rise in interest rates is likely.

The Bank's governor, Mark Carney, appeared to play down the case for an early rate rise when questioned by the Commons Treasury select committee yesterday, despite earlier leading markets to believe a hike was possible before the end of 2014.

Pat McFadden, Labour MP and a member of the select committee, said there had been "a lot of different signals" over the past year about when rates might rise, which was confusing for consumers and businesses.

"We've had a signal that rates probably wouldn't rise until 2016, we then had a market expectation that rates would go up in 2015, we then got a speech saying that might be an underestimation. It strikes me the Bank is behaving a bit like an unreliable boyfriend. One day hot, one day cold, and the people on the other side of the message are left not knowing where they stand."

Andrew Tyrie, the committee's chairman, said that since Carney arrived at the Bank almost a year ago, there had been "quite a lot of guidance, not all of it pointing in the same direction".

Under pressure to explain the apparent confusion surrounding the Bank's stance on rates, Carney insisted the monetary policy committee (MPC) had been consistent in approach, and said the data would dictate the timing of the first rate rise.

However, he said that weaker than expected wage growth suggested there was still considerable a significant amount of slack in the economy to be used up before a rise would be necessary.

"Taken in isolation, the developments on the wage front suggest to me that there has been more spare capacity in the labour market than we previously had thought," he said, adding that low wage growth was balanced against the possibility that growth would be stronger than expected in the second half of the year.

The pound fell to $1.697, as investors interpreted the comments as a signal that an early rate rise was less likely.

Carney said that the exact timing of the first rise in rates – which has been on hold at 0.5% since March 2009 – would be driven by the data. He said that the most important point was not the timing but that increases in the cost of borrowing would be "limited and gradual".

Markets have been confused by Carney's guidance on rates. At the May inflation report, Carney said the first rise was most likely to be in the second quarter of 2015. A month later, he surprised the City by warning in his Mansion House speech that a rise "could happen sooner than markets currently expect".

Carney suggested that his comments had been designed to correct market expectations that there was only a 15% chance of a rate increase before the end of 2014.

He told the TSC that as a governor of a G7 central bank for the past seven years – in Canada and then the UK – he was well aware that his speech would move markets.

"We'd like to see the market adjust to the data. Just as our opinions are updating, [markets] should adjust to the data. A short-term market for expectations of Bank rate that moves around with the data is a healthy thing."

Sam Hill, a senior UK economist at RBC Capital Markets, said that overall Carney's message at the TSC was a more balanced assessment than expected, but the risks of an early rate hike remain.

Meanwhile, the Institute of Directors said it was breaking with the consensus among business organisations and calling for the first rise in interest rates this autumn.

James Sproule, the IoD's chief economist, said: "As the recovery takes hold it will soon be the time to start taking interest rates to a level where monetary policy can once again become an effective economic lever. "Ideally, this rise in interest rates will be achieved gradually, starting in the autumn of 2014, with an aim of reaching a more normal level, perhaps 3%, by autumn 2015."