Six MPC members entrenched against further QE

Incoming Bank of England governor Mark Carney will probably have to keep policy on hold at his first meeting after predecessor Sir Mervyn King’s call for stimulus was again defeated by six votes to three.

Mark Carney will take the reigns at the Bank of England today. Picture: PA

Carney is thought to be in the pro-stimulus camp and is still expected to persuade the bank to return to money printing later in the year.

The vote at the June meeting of the monetary policy committee (MPC) mirrored a trend seen over recent months as a majority of members rejected King’s final call for another £25 billion bond purchase to boost the economic recovery.

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The committee noted that although there had been little economic news in May, developments had “generally been positive and followed a sequence of small improvements in earlier months”.

Howard Archer, chief UK economist at IHS Global Insight, said it was no surprise that King remained in the minority for his final meeting, and noted there was little evidence that any of the six MPC members voting against quantitative easing were close to changing their minds.

He added: “We now move to the Carney era at the Bank of England, and he will no doubt be relieved to see the economy looking a bit perkier as he takes up the reins.

“Indeed, with the economy currently showing signs of widespread improvement, pressure on Carney to take immediate action has receded thereby giving him more time to take full stock of the situation from within the Bank of England and to establish his working relationship with the rest of the MPC.

“We believe it is unlikely that any major policy action will occur at the July MPC meeting, especially as the committee will be getting the Bank of England’s new growth and inflation forecasts at the August meeting.”