Bank of England governor Mark Carney has said interest rates are likely to increase despite the deflationary impact of the Chinese slowdown and low oil prices.
Speaking in Jackson Hole, Wyoming, Carney said that any downside global risks must be weighed against the strength of the domestic economy.
He also signalled that early 2016 remains a possible starting point for interest-rate increases.
The Bank’s Monetary Policy Committee, which is responsible for setting rates, recently published forecasts showing the UK’s bout of low inflation would soon end.
Carney said the $8 trillion sell-off in global equity markets has not changed the Bank's position.
“Recent events do not yet, to my mind, merit changing the MPC’s strategy for returning inflation to target."
Instead, it must strike a balance between “domestic strength on the one hand and disinflationary forces from the combination of the exchange rate and global weakness on the other”.
Carney said the UK’s direct exposure to China is “modest” and, recent tighter financial conditions must be considered against a backdrop of years of improvement.
He repeated his recent comments that the decision on when to raise the benchmark rate would come into “sharper relief” around the turn of the year.
The Bank’s nine-member MPC will be paying particular attention to imported deflation that may appear in the core consumer-price index. That measure rose to a five-year high in July, though the headline rate was just 0.1%.
Carney said that further slowing in China and Asia could increase deflationary pressures in the UK and “reintroduce a headwind to growth and inflation over the medium term".
Given the underlying strength in the UK economy, “developments in China are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert", Carney said.