The extension was agreed in an exchange of letters between the governor and the chancellor published this morning.
The United Kingdom will leave the European Union on March 29 but as yet no full exit deal has been agreed and many lawmakers in Prime Minister Theresa May's own party object to her own so-called Chequers proposals.
Carney said in a letter to Hammond: "I recognise that during this critical period, it is important that everyone does everything they can to support a smooth and successful Brexit".
Bank of England's Mark Carney will extend his tenure as governor by seven months to ease the BOE's transition as Brexit nears.
Last week Prime Minister Theresa May gave her support to Carney staying on in his role to ensure a "smooth Brexit" and an "effective transition" at the central bank. He extended it by a further year in the aftermath of the Brexit vote.
Concerns have grown over recent months that the United Kingdom and European Union are potentially headed for a "no deal" Brexit which could well induce further significant market stresses, of which Sterling would likely bear the brunt.
Brexiteer Nigel Evans told MailOnline: 'Project Fear wouldn't be the same without Carney's regular Grim Reaper pronouncements'. The sooner the Government provides clarity, the better.
Having an inexperienced leader at Threadneedle Street at such a moment would nearly certainly be unhelpful.
He added that there were "limits" to what monetary policy could do to help ease the price shock for Britons.
"I have been discussing with the governor his ability to be able to serve a little longer in post in order to ensure continuity through what could be quite a turbulent period for our economy in the early summer of 2019", Hammond said.
The then-deputy governor, Paul Tucker, had been seen as the favourite for the role before then-Chancellor George Osborne stunned Westminster with the appointment.