Bank of England policymakers unanimously decided to maintain the interest rate and the asset purchase programme amid heightened uncertainty ahead of the EU referendum in June.
The Monetary Policy Committee, headed by Mark Carney, voted 9-0 to hold the interest rate at 0.50 percent, the BoE said in a statement.
The decision marked the 7th anniversary of the key rate at the current 0.50 percent. McCafferty dropped his call for a quarter point rate hike last month for the first time since July 2015.
Policymakers also unanimously voted to maintain quantitative easing at GBP 375 billion.
There is a “range of views” among MPC members about the balance of risks to inflation. But all members agreed that maintaining the current stance of policy was appropriate at this meeting.
The interest rate path that it would actually follow over the next few years would depend on economic circumstances, the bank said.
Increased uncertainty surrounding the forthcoming referendum on the U.K. membership of the European Union is likely to delay spending decisions and depress demand growth in the near term, the minutes said.
The MPC judged the outlook for domestic activity to be little changed since the issue of the February Inflation Report, with GDP expected to grow at around average rates over the forecast period.
However, the government yesterday downgraded its growth projection for this year to 2 percent from 2.4 percent seen in November. The outlook for next year was cut to 2.2 percent from 2.5 percent.
The projections are based on the assumption that the U.K. remains a member of the European Union.
In its assessment, the Office for Budget Responsibility warned that the “Brexit” could have negative implications for activity via business and consumer confidence and might result in greater volatility in financial and other asset markets.
If the UK votes to stay in the EU, ING Bank NV’s economist James Knightley said the delayed hiring and investment plans will be implemented in the second half of 2016.
Given the underlying strength of the economy and rising medium term inflation pressures, the economist still think a November rate hike is possible.
Should the UK vote to leave the EU in June’s referendum, monetary policy will become a lot more complicated for the BoE, Howard Archer, an economist at IHS Global Insight noted.
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