There had been weeks of speculation as to whether Carney, the former governor of Canada's central bank, who took the Bank of England job in 2013, would agree to an extension of his term given the potential uncertainty over Brexit.
Chancellor Philip Hammond announced the news on Tuesday, saying Mr Carney had agreed to the extension "despite various personal pressures".
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Hammond had earlier said that Carney would stay on as governor of the central bank until the end of January 2020 to help navigate the turbulence of Brexit, with Britain due to depart the bloc in March 2019.
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As if the storm itself is not unsafe enough, it is expected to spawn tornadoes in southeast North Carolina on Thursday and Friday. The city warns that people "may need to move up to the second story" but tells them to stay put as "we are coming to get you".
Carney focused heavily on minimising financial market turmoil in the run-up to June 2016's European Union referendum and has warned since of the costs of a disorderly Brexit, drawing fire from Brexit supporters.
Carney, who is Canadian and is reported to be interested in returning to politics back home, won acclaim for helping to calm financial markets in the wake of Britain's vote in June 2016 to leave the European Union.
Carney has already extended his term once at the Bank in a move to ensure continuity through the Brexit negotiations. He was set to step down in June 2019.
Labour MP Virendra Sharma, a champion of the anti-Brexit campaign group Better for Britain, said Carney's willingness to stay through the turbulence "shows the problems that the government are having on Brexit".
"I fully recognise that during this critical period, it's important that everyone does everything they can to help with the transition of exiting the EU", Carney said.
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