Bank of England MPC members hint at further QE stimulus
Some members of the Bank of England's policy setting body were
considering voting for more quantitative easing earlier this month,
In the end, all nine members of the monetary policy committee
(MPC) voted to keep rates at 0.5% and hold quantitative easing (QE)
But the minutes showed some MPC members thought that the QE
programme might need to be extended.
They argued the decision not to lift QE this month was "finely
Under QE, the Bank buys government bonds, hoping to create
beneficial knock-on effects for the economy.
In July, the MPC had voted by 7-2 to increase the QE programme
Minutes from the August MPC meeting showed that most members
were happy to keep the QE programme on hold for the moment.
The committee wants to see what impact the new Funding for
Lending Scheme (FLS) will have.
Under FLS, the Bank of England is making low-cost funds
available to banks and building societies in an attempt to cut
borrowing costs and increase lending to business and
The Bank said it was "encouraging that a number of banks had
decided to cut rates on some mortgage and small-business loans",
and added that the impact of the scheme could be greater than it
had assumed in its latest Inflation Report.
When it came to the vote, most MPC members opted for a policy of
"For most members, the decision [of no change] this month was
relatively straightforward. Over the coming months, the committee
could take stock of the impact of the FLS and the implications this
had for other potential policy options," the minutes said.
"For some members, the decision was nevertheless more finely
balanced, since a good case could be made at this meeting for more
Philip Shaw at Investec said: "It was perhaps at this stage a
touch surprising that some MPC members thought there was a finely
balanced argument as to whether to expand QE.
"That's an acknowledgement that the flow of economic news has
been poor, but also it suggests that the door for further asset
purchases is well and truly open."