EIGHT of the Bank of England’s nine rate-setters voted against more quantitative easing at this month’s meeting, with the panel warning that inflation is likely to stay above target for another year.
Yet the minutes of the Monetary Policy Committee, published yesterday, also warned that the economy could have contracted in the final three months of 2012.
David Miles was the only member of the nine-man committee to vote for a further expansion of the Bank’s balance sheet. Miles, who has been notable for making dovish noises of late, said the Bank should expand its asset purchases from the existing £375bn total, to £400bn.
His colleagues were not convinced, however, and the Bank will end 2012 with its stock at £375bn, and with interest rates held again at 0.5 per cent.
“Most members agreed that developments on the month had done little to alter the balance of arguments between maintaining and increasing the size of the monetary stimulus,” the minutes said.
October’s inflation level of 2.7 per cent on the consumer price index was “higher than had been anticipated by the committee”, it admitted. Figures released this week showed that inflation stuck at 2.7 per cent in November, too.
Regarding economic prospects, the minutes said: “The Committee’s best judgement was that the outlook was for broadly unchanged underlying output over the turn of the year. Taken together with the unwind of the third-quarter boost to GDP from the Olympic Games, it was quite likely that headline GDP would register a contraction in the fourth quarter.”