The former Liverpool defender doesn't believe the deposed Premier League champions need serious improvement in the summer.
Manuel Pellegrini’s side have been highly disappointing in their defence of the title this season, currently sitting second in the table but 13 points behind champions Chelsea.
Their poor performances this season have led to a host of speculation about the future of manager Pellegrini and the majority of his squad, with many suggesting that there is a need for major changes at the Etihad.
Carragher doesn’t believe that though, instead insisting they in fact have the best squad in the Premier League.
“It’s not about City needing a major overhaul,” he said.
“Chelsea have won the league and they’ve been the best team, no doubt [but] you compare that to the strikers City have got and the squad players they have – they’ve got the better squad.”
One of the players under intense speculation at City has been star man Yaya Toure, who has been heavily criticised for his performances this year.
The Ivorian has been a key player for the side during their title-winning campaigns but has looked off the boil this season and has been linked with moves elsewhere.
And fellow pundit Thierry Henry says a decision must be made about the midfielder sooner rather than later.
“The massive key for me is Yaya Toure,” he added.
“What is he going to do next season? If he stays, there is no way he can play in front of the back four any more. He has to play higher. I think it becomes really difficult for him to play there.”