Stock markets roared ahead and sterling tumbled after the Bank of England and European Central Bank took unprecedented steps to quash investor fears that they were preparing to reduce monetary stimulus.

Under the chairmanship of new Bank of England governor, Mark Carney, the monetary policy committee issued an unexpected statement to indicate that despite a rise in inflation there was no need for the sharp rise in yields on government bonds, known as gilts. The rise in yields took place in the six weeks since the US Federal Reserve started to discuss reducing economic stimulus, rattling markets amid fears that other central bank would follow.

And Mario Draghi, the head of the ECB, said the eurozone's central bank was taking unprecedented steps to give so-called forward guidance to reassure the markets that it had no plans to raise interest rates soon. The ECB, facing a new crisis in Portugal, had even discussed a rate cut, Draghi said.

"The governing council expects the key ECB rates to remain at present or lower levels for an extended period of time," Draghi told a news conference.

The unexpected statement from the MPC – chaired for the first time by Carney in his first week as Bank of England governor – pushed the FTSE 100 almost 200 points higher and drove sterling down against the dollar. Gilt yields also fell, after rising more than one percentage point since the start of May when the Fed first started discussing easing monetary policy, after the markets responded to the remarks by the MPC.

The MPC's statement is a departure from the stance adopted by Carney's predecessor, Sir Mervyn King, who retired last week and who rarely issued statements immediately after rate-setting meetings.

As expected the MPC left interest rates on hold at 0.5% – the historic low they have been at for more than four years – and quantitative easing (QE) unchanged at £375bn.

While the decision not to embark on more QE had been expected and follows a string of upbeat data that has reinforced hopes that growth in the UK economy was stronger in the second quarter than the first, when gross domestic product increased by 0.3%.

"At its meeting today, the committee noted that the incoming data over the past couple of months had been broadly consistent with the central outlook for output growth and inflation contained in the May [inflation] report. The significant upward movement in market interest rates would, however, weigh on that outlook; in the committee's view, the implied rise in the expected future path of Bank rate was not warranted by the recent developments in the domestic economy," the MPC said.

The former MPC member, Andrew Sentance, tweeted: "Inflation is set to rise, and BoE statement pours cold water on rate rises. Pretty dismal signal from MPC to Britain's savers."

Howard Archer, chief European and UK economist at IHS Global Insight, said: "With gilt yields having recently been sent significantly higher amid increased global financial market turmoil, the MPC likely felt it was a good move to make it clear at an early stage that any tightening in UK monetary policy is a considerable way off."

Economists said more QE was also a possibility at the August policy meeting, by which point the MPC will have seen the Bank's latest forecasts for growth and inflation before its next quarterly inflation report.

Since its last quarterly inflation report in May, the MPC said on Thursday that 12-month CPI inflation – a measure of consumer prices – had risen to 2.7% and could rise further before falling back. It also noted that interest rates being priced in by markets had risen sharply and asset prices had been volatile. "In the United Kingdom, there have been further signs that a recovery is in train, although it remains weak by historical standards and a degree of slack is expected to persist for some time," the MPC said. Interest rates have been at an all-time low of 0.5% since March 2009, the same month that the MPC made the unprecedented decision to introduce QE, its asset purchasing programming.

James Knightley of ING said: "This is pretty aggressive stuff that has prompted a sharp move lower in sterling and suggests that Carney is very much in the dovish camp."

Carney succeeded King as the Bank's governor on 1 July and how he voted at the meeting will not be known until 17 July.

But it is now clearer that next month the MPC could start to provide guidance about the potential future path of interest rates, following in the footsteps of the Fed and marking a departure for the Bank. In the statement issued after the first meeting Carney chaired, the MPC said: "The latest remit letter to the MPC from the chancellor had requested that the committee provide an assessment, alongside its August inflation report, of the case for adopting some form of forward guidance, including the possible use of intermediate thresholds. This analysis would have an important bearing on the committee's policy discussions in August."

The CBI's director of economics, Stephen Gifford, said: "Looking ahead, some form of forward guidance on interest rates remains a strong possibility. Although the MPC's scepticism will be hard to dispel, recent financial market volatility and today's statement by the Bank have strengthened the case for providing greater clarity around monetary policy, which businesses would welcome."