Chancellor Philip Hammond confirmed that Carney's term has been extended until 31 January 2020, a further seven months on his original deal.
Ending days of mounting speculation, Hammond confirmed to lawmakers on Tuesday that the Canadian, who had been due to step down in June 2019, will extend his term to help steer the United Kingdom economy in the wake of Brexit.
He says: "Accordingly, I am willing to do whatever I can in order to promote both a successful Brexit and an effective transition at the BoE".
"I have been discussing with the governor his ability to be able to serve a little longer in the post in order to ensure continuity through what could be quite a turbulent period for our economy in the early summer of 2019", Hammond said.
"That Mark Carney wants to stay should worry everyone, but the shocks facing the economy could be deeply damaging - jobs and our prosperity are at risk".
Critics have accused him of contributing to "Project Fear".
But Best for Britain spokesman Paul Butters said: 'It sounds like sour grapes from swivel eyed Brexiteers that a man who speaks common sense is despised.
Following the hearing, Mrs Morgan said: 'Stability is vital during this important period.
Still, the latest extension raises questions about the government's grasp on the Brexit process if Carney's presence is needed to ensure stability.
'Any extension to Dr Carney's term should not be used to delay succession planning'.
'You can't avoid that medium-term impact on real incomes, ' he added.
"I think a governor who is leaving at the end of June with his bags already packed would be in a poor situation to represent the U.K.in what might be some critical and time-critical negotiations over that period, trying to find practical solutions to situations that might arise", Hammond said.
The then-deputy governor, Paul Tucker, had been seen as the favourite for the role before then-Chancellor George Osborne stunned Westminster with the appointment.