Bank of England Governor Mark Carney has tried to defuse expectations of an imminent rate hike by saying it would "not be the right tool" to deal with the UK's booming housing market.
Speaking following the publication of the Bank's latest quarterly inflation report, Carney again attempted to play down expectations of imminent rate rises, and suggested the housing market will not change that view.
Asked whether an incipient housing bubble could be dealt with by a rate rise, Carney said "monetary policy would not be the right tool" to approach the problem.
He instead pointed to the range of macro-prudential tools available to the Bank's Financial Policy Committee, such as adjusting bank capital requirements or mortgage affordability requirements.
He also pointed to steps already taken, such as the launch of the Mortgage Market Review and the introduction of stress tests for banks.
"Those steps are just starting to have their effect [...] we view monetary policy as the last line of defence against financial instability," Carney said.
Turning to the broader reasons for a rate rise, Carney said the economy is "edging towards" a time when a hike will be required, but emphasised the recovery has only just begun.
"We should not forget the economy has only just begun to head back to normal," he said.
"Securing the recovery is like making it through the qualifying rounds of the World Cup. That's a major achievement but it is not the ultimate goal."
The latest inflation report showed little change in the Bank's growth and inflation forecasts. The BoE now expects UK GDP growth of 2.9% next year, up from 2.7% in its February report, but the 2014 forecast of 3.4% was unchanged.
"When the committee does start to raise rates, it expects to do so gradually and to a level materially below the pre-crisis average," he added.
Carney's dovish tone, coupled with employment data which showed wage growth slowed to 1.3% in the three months to March, only prompted a slight move in currency and bond markets.
The pound fell to $1.678, down from $1.682 yesterday evening, while two-year gilt yields fell back from 0.73% to 0.7%.