MPC members gave unanimous backing to £75bn cash injection

ALL nine members of the Bank of England monetary policy committee (MPC) voted for an extra £75 billion to be pumped into the economy amid the darkening outlook, the minutes of the October meeting reveal.

MPC members looked at injecting a greater figure of £100bn into the economy, but settled on increasing the so‑called quantitative easing (QE) programme from £200bnto £275 vbn, the minutes said.

The committee also voted unanimously in favour of holding interest rates at historic lows of 0.5 per cent, where they have been pegged since March 2009 as Britain’s economic recovery has faltered.

The rare unanimous vote came after recent economic indicators showed that Britain’s rate of growth had slowed down and would be “close to zero” in the fourth quarter.

“For some members, the substantial downside risks pointed to injecting a larger monetary stimulus than otherwise in order to place the UK economy in a stronger position were those risks to materialise,” the minutes said.

“Depending on developments in the euro area and financial markets, the size of the stimulus could be adjusted in either direction.”

The latest voting pattern is seen as a marked deterioration of sentiment at the Bank about Britain’s economic prospects. Only one MPC member, Adam Posen, had been arguing for further so‑called quantitative easing for much of the past 12 months.

On Tuesday, Sir Mervyn King, Governor of the Bank of England, gave warning in a speech that the economic recovery was off track, as new data on the same day showed consumer price inflation surged to an unexpectedly high 5.2 per cent in September. This compared with 4.5 per cent in July, and was close to a 20‑year inflation high.

King said that the slowing in the world economy meant it would take longer to “return to normality”.