BANK of England Governor Sir Mervyn King was outvoted again at his final Monetary Policy Committee meeting, pushing unsuccessfully for a further increase in a quantitative easing programme aimed at supporting the struggling UK economy.
Sir Mervyn and MPC colleagues Paul Fisher and David Miles continued to push unsuccessfully for an immediate £25 billion increase in QE to £400bn two weeks ago, it emerged with publication yesterday of minutes of the committee's June 5 and 6 meeting.
They were outvoted by their six MPC colleagues, who voted to maintain QE at £375bn. This six-three voting pattern has occurred in every month since February, when Sir Mervyn and Mr Fisher joined Mr Miles in voting for a £25bn rise.
QE is aimed at stimulating economic activity by boosting money supply through the purchase of Government and corporate bonds, funded through the issuance of central bank reserves.
The minutes highlight the view among those pushing for further monetary stimulus at this month's meeting that recent "reassuring" economic news had not changed the likelihood that there would be only a modest recovery in UK growth.
Members pushing for further stimulus also highlighted very low growth in pay in the UK.
Detailing the rationale of those voting for a rise in QE, the minutes state: "The news on activity on the month had been reassuring but the outlook was no stronger than had been incorporated into the May inflation report projections.
"Those projections implied only a modest recovery in growth and relatively little improvement in unemployment. Moreover, the need to rebalance both at home and abroad was likely to prove a persistent drag on growth.
"The risks from the euro area remained substantial, especially through their potential effects on the UK banking sector. Commodity prices were lower and domestic cost pressures, as illustrated by very low pay growth, remained weak."
Providing further details of the views of the camp pushing for further stimulus, the minutes add: "An expansion in demand would probably be associated with a strengthening in productivity growth and would be unlikely to be reflected in higher cost pressures; if faster growth in demand boosted productivity sufficiently, cost pressures could even be lower.
"Additional asset purchases now would allow an earlier normalisation of the monetary stance."
Explaining the stance of the majority voting for no change in QE, the minutes state: "For most members, the current policy setting was appropriate at this time. The modest improvement in activity on the month had been broadly based. This followed a number of months in which the news on activity had been neutral or positive, suggesting that the recovery was becoming more established."
All nine MPC members voted again on June 6 to hold UK base rates at their record low of 0.5%, where they have been since March 2009.
For Sir Mervyn, who will be succeeded in the top job at the Bank of England by former Bank of Canada Governor Mark Carney on July 1, this month's MPC meeting was his 194th and final one.
The minutes show Bank of England deputy governor and MPC member Charlie Bean, on behalf of past and present MPC members and Bank's staff, thanked the Governor for his work as chairman of the MPC and for the central role he had played in establishing both the inflation-targeting framework and the committee itself.
Treasury representative Nicholas Macpherson expressed the Treasury and Chancellor George Osborne's appreciation of the personal contribution made by Sir Mervyn over several decades to the development of the monetary and macroeconomic framework in the UK.
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