'Quantitative easing' backed unanimously

Published on Wednesday 18 March 2009 19:14

ALL nine members of the Bank of England's rate-setting committee voted this month to create £75 billion in new money and cut interest rates by half a point.

Minutes of the monetary policy committee's meeting on 4-5 March, published yesterday, showed that there was some debate about whether borrowing costs needed to come down from 1 per cent, but all agreed the economy needed more monetary stimulus.

Some members argued for smaller amounts of central bank money – some 50bn – to be created amid caution over the effect of the measures.

Other members pressed for larger amounts – up to 100bn – saying that if the first injection was too small, "observers would wrongly infer that such asset purchases were not an effective policy tool".

Howard Archer, chief UK economist at IHS Global Insight said: "Quantitative easing is clearly now going to be at the forefront in the Bank's efforts to stimulate the economy."