MPC minutes reveal governor wanted more money printing

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The Bank of England’s outgoing governor, Sir Mervyn King, and two other members of its monetary policy committee (MPC) voted in favour of restarting the Bank’s bond-buying programme earlier this month.

Minutes of the meeting, published today, showed King, along with Paul Fisher and David Miles, wanted to increase the size of the Bank’s quantitative easing (QE) facility by £25 billion. The other six MPC members voted to keep QE at it current level of £375bn.

Although the MPC said inflation was likely to remain above the 2 per cent target over the next two years, some members felt that starting up the printing presses again “would not necessarily lead to any additional inflationary pressure”.

The minutes said: “Further asset purchases, in part by acting to reduce longer-term interest rates and underpinning the value of a broad range of assets, could help the process of rebalancing the economy, and avoid potentially lasting destruction of productive capacity and increases in unemployment.”

The last time there was a 6-3 split in the voting on QE was in June 2012, when King and two other members voted for an increase. At the subsequent meeting in July 2012, QE was raised by £50bn to £375bn.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “With economic activity likely to remain fragile and limited, we believe that the Bank of England will eventually decide to give the economy a further helping hand with some more QE.

“This could very well happen in the second quarter or shortly after Mark Carney takes over as Bank of England governor in July.”