Rate-setters considered throwing even more firepower at the flagging UK recovery this month, minutes of the Bank of England’s latest meeting revealed today.
Rate-setters considered throwing even more firepower at the flagging UK recovery this month, minutes of the Bank of England’s latest meeting revealed today.
The monetary policy committee pumped an extra £50 billion into the economy in July via quantitative easing and unanimously voted to sit on its hands this month.
But the minutes showed that for “some members”, Bank code for a minority on the nine-strong MPC, “the decision was more finely balanced, since a good case could be made at this meeting for more asset purchases”.
Despite yesterday’s shock rise in inflation to 2.6%, the Bank’s forecasts show the cost of living dipping under its 2% target in two years’ time, potentially paving the way for more QE in the autumn.
Deutsche Bank chief economist George Buckley said: “The fact that the vote was more ‘finely balanced’ for some members suggests the chance of a QE expansion in the event of weaker growth remains high.”
But for now the MPC looks in “wait and see” mode as it weighs up the effect of the Government’s £80 billion Funding for Lending credit scheme.
Rate-setters have taken early encouragement from falling rates on small business and mortgage loans since the scheme was launched at the beginning of the month, with hopes rising that the impact might be “somewhat greater” than the cautious assumptions of its August forecasts.
