Wednesday, 20 February 2013 10:09
QE splits Bank of England as three members vote for additional £25bn
Three members of the Monetary Policy Committee voted to increase the size of the asset purchase programme at this month's meeting.
In the minutes of the meeting held on 6-7 February, it is reported that Governor Mervyn King, Paul Fisher and David Miles all voted to increase the size of the programme by £25bn.
This would bring the total size of the programme to £400bn.
The move will be good news for David Miles who has been the lone supporter of an addition to the programme for the past three months.
The minutes said: "A case could be made for undertaking additional asset purchases at this meeting. Although inflation seemed likely to remain above the two per cent target over the next two years, the degree of slack in the economy, and the likely positive response of supply capacity to increased demand, meant that higher output growth would not necessarily lead to any material additional inflationary pressure.
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"Further asset purchases, in part by acting to reduce longer-term interest rates and underpinning the value of a broad range of assets, could help the process of rebalancing the economy, and avoid potentially lasting destruction of productive capacity and increases in employment."
However, the three members were outvoted by remaining members Charles Bean, Paul Tucker, Ben Broadbent, Spencer Dale, Ian McCafferty and Martin Weale who voted to hold the programme at £375bn.
The Committee voted unanimously to hold the base rate at 0.5 per cent, where it has now remained since March 2009.
The next meeting will be held on 6-7 March.
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In the minutes of the meeting held on 6-7 February, it is reported that Governor Mervyn King, Paul Fisher and David Miles all voted to increase the size of the programme by £25bn.
This would bring the total size of the programme to £400bn.
The move will be good news for David Miles who has been the lone supporter of an addition to the programme for the past three months.
The minutes said: "A case could be made for undertaking additional asset purchases at this meeting. Although inflation seemed likely to remain above the two per cent target over the next two years, the degree of slack in the economy, and the likely positive response of supply capacity to increased demand, meant that higher output growth would not necessarily lead to any material additional inflationary pressure.
{desktop}{/desktop}{mobile}{/mobile}
"Further asset purchases, in part by acting to reduce longer-term interest rates and underpinning the value of a broad range of assets, could help the process of rebalancing the economy, and avoid potentially lasting destruction of productive capacity and increases in employment."
However, the three members were outvoted by remaining members Charles Bean, Paul Tucker, Ben Broadbent, Spencer Dale, Ian McCafferty and Martin Weale who voted to hold the programme at £375bn.
The Committee voted unanimously to hold the base rate at 0.5 per cent, where it has now remained since March 2009.
The next meeting will be held on 6-7 March.
• Want to receive a free weekly summary of the best news stories from our website? Just go to home page and submit your name and email address. If you are already logged in you will need to log out to see the e-newsletter sign up. You can then log in again.
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