King outvoted again in call for more QE

The Bank of England’s monetary policy committee (MPC) remained split over the prospect of more money printing earlier this month, with governor Sir Mervyn King outvoted again in pressing for a £25 billion extension to the central bank’s quantitative easing (QE) programme.

Minutes of the MPC meeting, published today, show it was the second month in a row that King was joined by Paul Fisher and David Miles in voting to lift the stock of asset purchases to £400bn.

However, the other six committee members were unconvinced, as inflation remains above the 2 per cent target and more QE could threaten to push it even higher.

The minutes said: “It might also lead to an unwarranted depreciation of sterling if it were misinterpreted as a lack of commitment to maintaining low inflation in the medium term.”

Consumer price inflation rose to a nine-month high of 2.8 per cent in February, according to official figures released yesterday. The Bank of England forecasts it will rise above 3 per cent later this year, and will not return to its 2 per cent target until early 2016.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “We expect the Bank of England to deliver one £25bn portion of QE in the second quarter, with another £25bn portion occurring shortly after Mark Carney takes over as governor in July.”

Today’s minutes also show that the MPC voted unanimously to keep the Bank’s base rate at its record low of 0.5 per cent.