Bank of England Chief Mervyn King maintained his call for more stimulus for the fourth month and was defeated again by a majority of six members as in previous months who cited faster-than-expected growth and pipeline impact from previous stimulus.
At his penultimate meeting, King along with Paul Fisher and David Miles sought an increase in quantitative easing by GBP 25 billion to a total of GBP 400 billion, the minutes showed Wednesday.
They said the case for additional stimulus was more compelling. "Further asset purchases now would facilitate an earlier normalization of the monetary stance when that became appropriate," the minutes showed.
But most members said the effects of the previous round of asset purchases were still coming through and, together with the extended Funding for Lending Scheme, should continue to boost activity.
"Monetary policy was already exceptionally accommodative, and further purchases could contribute to an unwarranted narrowing in risk premia and complicate the transition to a more normal monetary stance at some point in the future," most members said.
The nine-member Monetary Policy Committee unanimously decided to maintain the record low 0.50 percent interest rate.
The bank expects the economy to expand 0.5 percent in the second quarter, faster than the 0.3 percent growth seen in the first quarter. At the release of the quarterly Inflation Report, King said the recovery is in sight, but he insisted for more stimulus to fix slack in the labor market.
Members said the outlook for growth remained poor by historical standards, and inflation is likely to rise a little further in the short run and remain above the target for a further two years.
Some policymakers have become more concerned about the impact that more QE would have on inflation expectations, noted Samuel Tombs, an economist at Capital Economics. As a result, the new central bank governor Mark Carney's task of garnering enough support for further stimulus remains tough, he noted.
Elsewhere, data from the Office for National Statistics showed that the U.K. budget balance, excluding interventions, showed a surplus of GBP 6.3 billion in April compared to a surplus of GBP 19.1 billion in the previous year. Nonetheless, the deficit was below the consensus forecast of GBP 8.5 billion.
Another report from the ONS showed that retail sales volume declined unexpectedly in April, by 1.3 percent from a month ago, when it was down 0.6 percent. Sales were forecast to rise by 0.1 percent.
Similarly, sales excluding fuel, dropped 1.4 percent compared with an expected 0.1 percent growth. That follows a 0.7 percent fall in March.
Including auto fuel, sales rose 0.5 percent in April from last year, offsetting last month's 0.5 percent drop. Economists had forecast a 2 percent increase.
Sales, excluding fuel, were 0.2 percent higher year-on-year. However, the pace of growth was weaker than the expected 1.8 percent expansion and March's 0.4 percent rise.
IHS Global Insight's Chief U.K. economist Howard Archer noted that retail sales provides a reminder that the economy is not yet out of the woods and still has a challenging job to develop sustained, clear growth.
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Business News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.