THE Bank of England's Monetary Policy Committee (MPC) remains split on whether to increase the quantitative easing programme but has signalled it may extend the Funding for Lending scheme (FLS).
Minutes released from the MPC's April meeting show six members voted to leave QE unchanged at £375 billion amid concerns any extension would see inflation start to rise again and affect the value of sterling.
Governor Sir Mervyn King, Paul Fisher and David Miles continued to vote for further additions and argued there was a case to extend the asset purchase programme by a further £25bn as prospects for growth in the economy were weak.
However, the committee did see "merit" in a possible extension to the Funding for Lending programme, which is designed to boost credit availability for households and businesses.
The minutes said: "The committee agreed that a well-capitalised banking system was essential to improving the supply of credit and the supply capacity of the economy in the medium term. The committee also saw merit in possible extensions to the FLS that would boost lending further."
The scheme was launched last summer by the Bank and the Treasury to offer lenders funding at low interest rates on condition it is passed on to households and businesses.
The admission the bank sees it as a potentially more effective form of stimulus than QE makes it appear likely Funding for Lending will be extended beyond its current deadline of January 31 next year.
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