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Dollar mostly flat after cool US inflation data

New York - The dollar changed little against most other major currencies on Thursday as weak US inflation data suggested the Federal Reserve has more leeway to hold interest rates at ultra-low levels.

US consumer prices edged up 0.1% in March and recent gains in core prices on the consumer price index slowed sharply, to a 0.1% rise, the Labour Department reported.

Omer Esiner of Commonwealth Foreign Exchange said the dollar pared some of its overnight gains after the CPI report.

"The moderating core CPI could reduce pressure off the Fed to tighten monetary policy and somewhat validates Fed Chair Janet Yellen's suggestion that transitory factors had pushed recent readings of inflation higher," Esiner said.

The pound fell 0.4% against the US currency, to $1.4154, after the Bank of England kept its key rate at a record-low 0.50%, as expected, but warned against a possible exit by Britain from the European Union, to be decided by a June 23 vote.

"There are some signs that uncertainty relating to the EU referendum has begun to weigh on certain areas of activity, as some decisions, including in capital expenditure and commercial property transactions, are being postponed pending the outcome of the vote," the minutes of the meeting said.

China cut its exchange rate for the yuan currency against the US dollar by the largest one-day drop since January.

The People's Bank of China set the yuan at 6.4891 to the dollar, down 0.46% from Wednesday's fix, according to the China Foreign Exchange Trade System.

Authorities only allow the yuan, also known as the renminbi, to rise or fall 2% on either side of the daily fix to prevent volatility and maintain control over the currency.

The yuan fell to 6.4826 yuan per dollar around 15:30 GMT, a decline from 6.4784 yuan at the same time on Wednesday.

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