The Bank of England is virtually guaranteed to pump more money into the economy next month, economists said, after official minutes showed that four ratesetters, including the Governor, voted for another round of quantitative easing in June.
It was only the fourth time Sir Mervyn King has been outvoted since he took over in 2003 but the minutes suggested opinion was likely to swing behind him in July.
“Most members judged that some further stimulus was either warranted immediately or would probably become warranted,” said minutes to the June Monetary Policy Committee (MPC) meeting.
Sir Mervyn, David Miles and Adam Posen voted for £50bn more QE while Paul Fisher called for another £25bn. The other five MPC members opted to leave QE unchanged at £325bn. All voted to hold rates at 0.5pc.
Ben Broadbent hinted he might back those calling for more QE next month, saying: “I would certainly say the case has grown since May for some sort of intervention.”
The closeness of the vote came as a surprise as Mr Miles was the only MPC member to back an increase in May, of just £25bn.
George Buckley, economist at Deutsche Bank, said he expected £50bn more QE on July 5 while Kevin Daly, of Goldman Sachs, said the minutes “shift the likelihood sharply in favour of a July move, rather than waiting until August”.
The minutes also raised the prospect of QE being used to buy assets other than gilts, as a number of economists and business groups as well as Mr Posen have been demanding.
“Some members expressed a wish for the MPC to consider additional policy tools,” the minutes said.
The meeting was held before the Bank and the Chancellor unveiled an emergency liquidity facility for the banks, the Extended Collateral Term Repo (ECTR), and a “funding for lending” plan to stimulate growth.
Yesterday, banks took up the full £5bn allotted under the first ECTR auction, which is designed to improve lenders’ liquidity by allowing them to swap low-grade assets for high-grade ones. (
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The minutes also suggested the Bank’s Financial Policy Committee (FPC) may loosen its liquidity requirements next week to ease banks’ funding costs and stop rates rising in the real economy.
A decision on QE could be delayed to assess the effect of FPC policies and any new measures to stabilise the eurozone, the minutes said. However, they appeared to dismisss speculation about a rate cut to 0.25pc.
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My comment - it's the false King
It was only the fourth time Sir Mervyn King has been outvoted since he took over in 2003 but the minutes suggested opinion was likely to swing behind him in July.
“Most members judged that some further stimulus was either warranted immediately or would probably become warranted,” said minutes to the June Monetary Policy Committee (MPC) meeting.
Sir Mervyn, David Miles and Adam Posen voted for £50bn more QE while Paul Fisher called for another £25bn. The other five MPC members opted to leave QE unchanged at £325bn. All voted to hold rates at 0.5pc.
Ben Broadbent hinted he might back those calling for more QE next month, saying: “I would certainly say the case has grown since May for some sort of intervention.”
The closeness of the vote came as a surprise as Mr Miles was the only MPC member to back an increase in May, of just £25bn.
George Buckley, economist at Deutsche Bank, said he expected £50bn more QE on July 5 while Kevin Daly, of Goldman Sachs, said the minutes “shift the likelihood sharply in favour of a July move, rather than waiting until August”.
The minutes also raised the prospect of QE being used to buy assets other than gilts, as a number of economists and business groups as well as Mr Posen have been demanding.
“Some members expressed a wish for the MPC to consider additional policy tools,” the minutes said.
The meeting was held before the Bank and the Chancellor unveiled an emergency liquidity facility for the banks, the Extended Collateral Term Repo (ECTR), and a “funding for lending” plan to stimulate growth.
Yesterday, banks took up the full £5bn allotted under the first ECTR auction, which is designed to improve lenders’ liquidity by allowing them to swap low-grade assets for high-grade ones. (
)The minutes also suggested the Bank’s Financial Policy Committee (FPC) may loosen its liquidity requirements next week to ease banks’ funding costs and stop rates rising in the real economy.
A decision on QE could be delayed to assess the effect of FPC policies and any new measures to stabilise the eurozone, the minutes said. However, they appeared to dismisss speculation about a rate cut to 0.25pc.
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My comment - it's the false King
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