Bank of England governor Mark Carney has hinted that interest rates could be slashed if the UK leaves the European Union with no trade deal.

Speaking at the annual gathering of central bankers in Jackson Hole, Wyoming, Mr Carney said that interest rates are 'more likely to ease than not' if Boris Johnson and EU officials fail to hammer out an agreement.

This would reduce the cost of borrowing to encourage spending in the UK.

Mr Carney expects a No Deal Brexit to cause sterling to plummet, pushing up inflation and prompting caution in businesses and consumers.

The Governor, who is stepping down from his role at the Bank of England next January, has previously been called out by Brexiteers for his doomsday warnings about a No Deal Brexit.

Federal Reserve Chairman Jerome Powell, left, and Bank of England Governor Mark Carney, right, walk together after Powell's speech at the Jackson Hole Economic Policy Symposium

When Mr Johnson entered No 10 last month, he vowed to defy the Brexit 'gloomsters', after Mr Carney warned that a No Deal recession could trigger the deepest recession for 100 years.

But the Governor has stuck to his guns, cautioning again last month that sterling could fall to new record lows in the case of a disorderly Brexit.

Mr Carney said last night: 'In the event of a No Deal, No Transition Brexit, sterling would probably fall, pushing up inflation, and demand would weaken further.'

The Bank of England's rate-setting Monetary Policy Committee would then have to assess how demand from consumers, supply from overseas businesses and the exchange rate affect trading conditions and the functioning of the economy.

But Mr Carney added: 'In my view, the appropriate policy path would be more likely to ease than not.'

An interest rate cut would boost millions of mortgage borrowers by reducing the amount they have to pay their lender.

But it would spell misery for Britain's savers, most of whom are already stuck with returns on their nest eggs that are far below inflation.

Carney, 54, also dismissed speculation that China's currency, the yuan, could replace the dollar as the world's favoured currency.

Federal Reserve Chairman Jerome Powell, left, and Bank of England Governor Mark Carney, right, pause in front of Mt. Moran after Powell's speech

Mr Carney expects a No Deal Brexit to cause sterling to plummet, pushing up inflation and prompting caution in businesses and consumers

He said the yuan 'has a long way to go before it is ready to assume the mantle', and that any transition away from the dollar would have to be slow and gradual.

The Canadian called for the International Monetary Fund (IMF) - which he is known to be interested in running - to gather country representatives together and help put an end to the trade spat between the US and China.

In a call for peace on both sides, he said: 'Transparent, evidence-based discussions convened by the IMF can both discipline policy and avoid potentially antagonistic misunderstandings that could lead to de-stabilising tit-for-tat retaliations.'

The central bank governor had positioned himself as a contender to be the next head of the IMF, replacing French economist Christine Lagarde, but is now expected to be passed over in favour of Bulgaria's Kristalina Georgieva.

His comments came as US President Trump - who is renowned for threatening China with trade tariffs over social media - appeared to fall out with his own central bank's chairman.

Jerome Powell, chairman of the US Federal Reserve, spoke about the economic risks of a trade war with China at Jackson Hole on Friday.

Mr Powell's words sparked a furious reaction from Mr Trump, who asked if Mr Powell was a greater 'enemy' than China.

The President took to Twitter to write: 'As usual, the Fed did nothing! It is incredible that they can 'speak' without knowing or asking what I am doing, which will be announced very shortly.

'We have a very strong dollar and a very weak Fed. I will work 'brilliantly' with both, and the US will do great.'