The Bank of England Governor Mark Carney said in an interview with the BBC on Tuesday that he expects inflation to decline in coming months, but he believes inflation will be near the central bank's 2% target within two years.

Carney noted that interest rate hike is still possible, but future increases will be "a little more gradual and limited" now.

According to official data on Tuesday, the U.K. consumer price index declined to an annual rate of 0.5% in December from 1.0% in November, the lowest level since May 2000.