Bank of England's Mark Carney will extend his tenure as governor by seven months to ease the BOE's transition as Brexit nears.
The extension was agreed in an exchange of letters between the governor and the chancellor published on Wednesday.
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It would have left him in the hot seat for just three months after Britain formally leaves the European Union in March, leaving a newcomer to navigate the aftermath of the divorce.
British media had previously reported the finance ministry was keen for Carney to extend his stay and was having difficulty finding a suitable successor.
Mr Carney had been due to step down from the role at the end of June 2019 - two years short of the eight-year term governors usually serve.
Hammond also said that Carney would provide "vital stability" for Britain's economy during the Brexit transition.
Carney has already extended his term once at the Bank in a move to ensure continuity through the Brexit negotiations.
Anthony Gillham, head of investments at Quilter Investment, commented: "If Carney's tenure is extended he will have his work cut out, but the case for an experienced captain to guide the United Kingdom through risky waters has grown stronger as Brexit negotiations have dragged on".
In a letter he added: "An extension of your term would ensure there is continuity at the bank during this exceptional period and would also allow for a new governor to be appointed during the autumn next year after the terms of the UK's withdrawal and the framework for the future partnership have been finalised".