By Nicholas Winning and Jason Douglas

LONDON--Prime Minister Theresa May is "fully supportive" of the work of Bank of England Gov. Mark Carney and backs him staying on in the job, her spokeswoman said on Monday, in a rebuke to hard-line backers of Britain's exit from the European Union who want him out.

Mrs. May's backing represents the strongest signal yet that the government is eager for Mr. Carney to stay on to steady the economy as the U.K. charts its departure from the bloc.

The central banker's supporters say his strong response to the June referendum results avoided market panic that could have endangered the world economy, but he is facing strident criticism from some for what they consider his alarmist warnings about the potential costs of leaving.

Mr. Carney took the job in 2013 on the understanding he would serve just five years of the standard eight-year term for a BOE governor. He opened the door to serving the full eight years late in 2015, but recent clashes with Brexit-supporting lawmakers fueled speculation that he might leave when his initial term expired in mid-2018.

"It is clearly a decision for him but the PM would certainly be supportive of him going on beyond his five years," Mrs. May's spokeswoman said. "She recognizes the work that he has been doing for the country and supports that."

Downing Street said Mrs. May was due to meet Mr. Carney later on Monday for a regular meeting which had been scheduled for some time.

Signs of possible tensions with Mrs. May had surfaced following a fall speech in which she criticized the BOE's easy-money policies. Treasury chief Philip Hammond later clarified the government has no plans to change the BOE's inflation-fighting remit or dilute its cherished independence.

Mr. Carney told lawmakers last week that he was still reflecting on his decision, which he called "entirely personal" because of potential disruption to his family's schooling.

A spokesman for the Bank of England said Mr. Carney will make a decision on his future before the end of the year. An early opportunity will come this week, when he presents the BOE's latest forecasts for growth and inflation Thursday.

Mr. Carney and his colleagues will decide whether they need to ease policy further this month, after cutting its benchmark interest rate to a new low of 0.25% and reviving a crisis-era bond-buying program in August to cushion the economy.

Write to Nicholas Winning at nick.winning@wsj.com and Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

October 31, 2016 09:09 ET (13:09 GMT)

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