Governor of the Bank of England Mark Carney has said that he will extend his contract for an extra year to 2019, saying he wants to help secure an "orderly transition" to Brexit.
Amid speculation that he would leave in 2018, the Canadian said: "I would be honoured to extend my time of service as governor for an additional year to the end of June 2019."
Mr Carney is the first non-British person to hold the role of Governor of the Bank of England.
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In a letter to Chancellor Philip Hammond, Mr Carney said: "By taking my term in office beyond the expected period of the Article 50 process, this should help contribute to securing an orderly transition to the UK's new relationship with Europe."
Mr Carney said he had taken the decision because he recognised "the importance to the country of continuity during the UK's Article 50 negotiations".
"I clearly signalled my intention to serve for five years. As testified to Parliament, that intention was driven by personal, family considerations," he wrote to Mr Hammond.
"In addition, I believed that five years would allow a reasonable timeframe to remodel the Bank to reflect its new, much broader responsibilities, and to complete the most important elements of the domestic financial reform agenda."
He added: "Since then, my personal circumstances have not changed but other circumstances clearly have, most notably the UK's decision to leave the European Union."
The pound held steady against the US dollar and the euro immediately after the announcement, with sterling up 0.3% against the US dollar at 1.223 and 0.2% against the euro at 1.114.
Mr Carney had faced mounting speculation that he was preparing to stand down early amid complaints he went too far in warning of the economic dangers of leaving the EU in order to bolster Remain during the referendum campaign.
When he took up the post in 2013, it was agreed that Mr Carney would serve an initial five-year term with the option of another three years.
Responding to the governor's letter, Mr Hammond said he was "very pleased" that Mr Carney had taken the decision to serve until the end of June 2019.
"This will enable you to continue your highly-effective leadership of the Bank through a critical period for the British economy as we negotiate our exit from the European Union," he added.
"I am grateful for your contribution to both monetary and financial stability to date, and I look forward to your continuing contribution in the future."
Mr Carney had met with Ms May at 10 Downing Street earlier as speculation mounted over the governor's future.
Asked before the announcement whether Ms May wanted him to stay on, the PM's official spokeswoman told a regular Westminster news briefing: "The Prime Minister has been clear in her support for the governor and the work he is doing for the country.
"It is clearly a decision for him but the PM would certainly be supportive of him going on beyond his five years."
Pressed on whether Ms May saw the governor as "the right man for the job", the spokeswoman replied: "Absolutely."
