Bank of England policymakers stood unanimous on retaining asset purchase programme intact early this month as members seem to hold different views on the need for further stimulus.
The nine-member Monetary Policy Committee governed by Mervyn King voted 9-0 to keep the size of quantitative easing unchanged at GBP 375 billion, the minutes of the meeting held on September 5 and 6 showed Wednesday. Members were also unanimous in leaving the key rate steady at 0.50 percent.
Policymakers discussed whether it was appropriate to modify or continue with the programme of asset purchases it had agreed at its July meeting. Economists expect the bank to expand its quantitative easing next in November.
"For most members this decision was relatively straightforward, although some of these members felt that additional stimulus was more likely than not to be needed in due course, while others saw the risks to inflation in the medium term as being more balanced around the target," it said.
The decision this month was more finely balanced for one member, the minutes showed. According to that member, there is a good case for more QE.
The MPC expects inflation to take longer time to reach its 2 percent target on rising commodity prices and labor costs. Inflation slowed marginally to 2.5 percent in August from 2.6 percent in the previous month.
Further, policymakers expect volatility in output growth to continue over the rest of the year, while the level of demand remained weak and the outlook was subdued and uncertain.
Members assessed that it is too early to measure the impact of the Funding for Lending Scheme on borrowing by the household and corporate sectors. But there had been encouraging signs about the impact the scheme was having on the lending rate, the minutes revealed.
Policymakers saw very substantial risks to remain for some time to come in the euro area, which if crystallized could impact the stability of the global banking system.
The Agents' summary of business conditions, released by the central bank today, showed that export growth continued to slow, mirroring weakening conditions throughout the euro area. Further, employment intentions indicated there would be little job creation in the private sector over the coming six months.
by RTT Staff Writer
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