Amid EU vote uncertainty, Bank of England keeps rates steady

AP News
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Posted: Apr 14, 2016 7:28 AM

LONDON (AP) — Bank of England policymakers voted unanimously on Thursday to keep interest rates on hold amid concerns about whether Britain will leave the European Union.

The June 23 referendum has added uncertainty to an already weakening economic outlook, prompting some economists to downgrade their growth forecasts. Members of the Monetary Policy Committee expressed concern in minutes released from their April 13 meeting.

"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," the minutes said. "This might lead to some softening in growth during the first half of 2016."

The International Monetary Fund on Tuesday warned that an exit from the EU could disrupt trade and damage the world economy. As a result, the IMF cut its forecast for U.K. economic growth this year to 1.9 percent, from 2.2 percent.

Also, consumer price inflation remains muted, so few economists predict an interest rate increase this year. While Britain's inflation rate unexpectedly rose to 0.5 percent in March, the highest in 15 months, the rate is still far below the Bank of England's 2 percent target.