Bank hints at pumping further cash into economy

Central bank policymakers yesterday opened the door to a further bout of money printing, possibly as early as next month, as the UK economy continues to wobble.

Minutes from the Bank of England’s latest rate-setting meeting showed most members believed the stresses of the past month had strengthened the case for an “immediate” return to quantitative easing.

The BoE’s nine-strong monetary policy committee (MPC) even considered a further cut in interest rates, taking them below their current record low of 0.5 per cent. Members, however, decided this would not be preferable to further QE.

A fresh injection of cash into the economy next month would be seen as a bold move – coming ahead of key GDP and inflation reports. Analysts yesterday said there was an outside chance of a move by the Bank of England in October, though most are betting on the MPC pushing the button in November or December by which time the key data on output and prices will be known.

The US central bank – the Federal Reserve – has also come under pressure to restart its QE programme. However, last night it decided to inject a further $400bn by stocking up on longer-term US treasury debt to push interest rates lower in a move dubbed “Operation Twist”.

UK policymakers face a torrent of gloomy economic data as the coalition government attempts to tackle the debt mountain through swingeing public sector cuts.

On Tuesday, the International Monetary Fund warned that Europe and the US could slip back into recession unless economic problems were tackled quickly and also slashed its 2011 and 2012 growth forecasts for the UK.

In its global financial stability report, released yesterday, the IMF claimed that political fighting was hampering efforts to restore the battered financial sector as it estimated the eurozone debt crisis put banks in