TWO members of the UK Monetary Policy Committee voted for even-greater economic stimulus than that approved two weeks ago – when the scale of quantitative easing was increased by £50 billion to £325bn – it has emerged.
Minutes of the Bank of England committee's February 8 and 9 meeting, published yesterday, show that external MPC members Adam Posen and David Miles had preferred a £75bn hike in QE.
The minutes highlight a belief in this minority camp that there is a "risk of a prolonged period of depressed demand causing inflation to fall materially below the target in the medium term", and a worry that "persistently weak growth might impair the future supply capacity of the economy".
Mr Posen and Mr Miles were outvoted by the other seven members of the committee, who all preferred the £50bn increase in QE which is now being implemented.
The QE programme, through which the Bank creates new money to buy Government and corporate bonds, is aimed at boosting the amount of money circulating and stimulating economic activity.
The votes of Mr Posen and Mr Miles signal significant worries about the prospects for a UK economy which is having to deal with huge public spending cuts. And their push for a greater increase in QE will further fuel speculation that the MPC could come back with more monetary policy stimulus before too long.
Vicky Redwood, chief UK economist at consultancy Capital Economics, said: "We had thought that Posen might do this, but Miles was a bit more of a surprise."
Ms Redwood, who expects a further rise in QE later this year, added: "One of the reasons the majority gave for voting for only £50bn was simply the risk that it might send out too negative a signal about the state of the economy. This hardly suggests that the committee considers its job now done."
The MPC voted unanimously two weeks ago to hold UK base rates at a record low of 0.5%.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article