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The Bank of England's Monetary Policy Committee (MPC) released its March meeting minutes on Thursday. All members voted to keep the central bank's monetary policy unchanged. Ian McCafferty, who voted to hike interest rate by 0.25% since August 2015, changed his mind in February.
The consumer price inflation in the U.K. was 0.5% in March, below the central bank's 2% target. The BoE noted that inflation was driven by declines in energy and food prices. The effect of falling in energy and food prices is expected to fade over the next year, according to the minutes.
The BoE noted that the pound depreciated in the recent month, adding that uncertainty around the referendum on Britain's membership in the European Union weighed on the currency.
The central bank said that uncertainty around the referendum on Britain's membership in the European Union also weighed on Britain's economy.
"There are some signs that uncertainty relating to the EU referendum has begun to weigh on certain areas of activity, as some decisions, including on capital expenditure and commercial property transactions, are being postponed pending the outcome of the vote. This might lead to some softening in growth during the first half of 2016," the minutes said.
The BoE noted that it was harder to interpret macroeconomic and financial market indicators in the coming months, saying that the central bank would likely act cautious.
All MPC members agreed to hike interest rate gradually once the BoE starts raising its interest rate and "to a lower level than in recent cycles", adding that further interest rate decision will depend on the incoming economic data.
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