Business

Bank of England split three ways over policy

Bank of England building
Image caption The Bank has held interest rates at 0.5% for the past 19 months

The Bank of England's Monetary Policy Committee was split three ways during its October meeting, released minutes have revealed.

Seven of its members voted for no change to interest rates and no additional stimulus spending, while one person wanted to see rates rise.

The ninth member, Adam Posen, voted to see quantitative easing (QE) - the bank's main stimulus measure - restart.

This is the means by which the Bank puts more money into the economy.

UK interest rates have been at an all-time low of 0.5% for 19 consecutive months, while the Bank has so far spent £200bn on QE.

Expansion soon?

The minutes showed that Mr Posen called for a further £50bn to be put into the QE programme.

Meanwhile, it was Andrew Sentance who again voted for a rise in interest rates, the fifth month in a row that he has done so.

Mr Sentance wanted to see rates rise from 0.5% to 0.75%.

The minutes also indicated that while most MPC members did not see the case for further QE at present, they did consider that the chance it may be needed in the near future had increased.

In a speech on Tuesday night, Bank governor Mervyn King also suggested QE may soon be necessary, saying that at present the amount of money in the economy was still "barely growing at all".

Following the release of the Bank's minutes, the British Chambers of Commerce (BCC) repeated its call for QE to be extended.

"We believe that such a move is necessary given the expected impact on the economy of the forthcoming VAT increase and spending cuts," said David Kern, BCC chief economist.

"While we support the painful fiscal measures that the government is preparing to implement, it is important to reduce the risk of a downturn, and increasing the QE programme can play an important role in sustaining demand in the economy."

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