Date: Wednesday 20 Jun 2012
June's vote on whether to beef up the Bank of England's asset purchasing programme (also known as quantitative easing, or QE) was closer than expected, with a 5-4 split on the Monetary Policy Committee (MPC) in favour of maintaining the status quo.
The previous month the MPC had voted 7-1 in favour of leaving the QE pot at £325bn. This month, Paul Fisher argued for a £25bn increase while external committee members Adam Posen and David Miles were joined by Bank of England governor Mervyn King in voting for a £50bn increase.
Although most pundits had acknowledged that there would be some lively debate over whether to sanction more purchases of gilts to provide the banking system with liquidity, most had expected the vote to be more clear cut, with perhaps a 7-2 split.
Reading the runes, it looks as if more QE could be on its way next month. "Most members judged that some further economic stimulus was either warranted immediately or would probably become warranted in order to meet the inflation target," the minutes said.
The MPC reckons that the UK inflation rate is likely to be lower than the Bank of England had forecast back in May, but a fall in commodity prices and weaker pay demands from a workforce mindful of the unemployment situation has made the short term outlook for inflation a little more rosy.
As expected, the MPC voted unanimously in favour of leaving interest rate policy unchanged.
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