“Bank of England policy makers Adam Posen and David Miles were defeated in their bid to raise stimulus by 75 billion pounds ($118 billion) as the majority argued such a move might provoke alarm on the economy.
Seven of the nine-member Monetary Policy Committee, including Governor Mervyn King, voted to raise the asset- purchase target by 50 billion pounds to 325 billion pounds, according to minutes of the Feb. 8-9 meeting published today in London. They argued a larger increase “risked sending a signal that the committee thought the economic situation was weaker than it was.”
“Recent data on the domestic and international economies had on balance been more positive than might have been anticipated towards the end of 2011, pointing to the possibility that growth might be stronger than expected in the near term,” the majority argued, according to the minutes.
The pound fell against the dollar after the report and was trading at $1.5717 at 10:31 a.m. in London, down 0.4 percent on the day. Gilts advanced, pushing the yield on the 10-year bond down 5 basis points to 2.17 percent.
Posen and Miles called for 75 billion pounds of additional quantitative easing because of “the considerable margin of spare capacity remaining in the economy and the extent of deleveraging still likely to be required,” the minutes showed. They saw a risk of a “prolonged period of depressed demand causing inflation to fall materially below” the central bank’s 2 percent target….”
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