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Bank Governor outvoted on more QE

Bank Governor outvoted on more QE

Category: Economy

Updated: 20/06/2012
First Published: 20/06/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Governor of the Bank of England, Sir Mervyn King, found himself outvoted on plans to inject more money into the economy this month.

Minutes released today from the Monetary Policy Committee's (MPC) monthly meeting show that Mr King voted to increase the programme of quantitative easing (QE) by £50 billion.

David Miles and Adam Posen also voted to increase QE by £50 billion, while Paul Fischer proposed a £25 billion increase from the current level of £325 billion.

However, the members found themselves narrowly outvoted, with the remaining five members of the rate setting committee voting to hold QE at its current level for the time being.

QE could soon be increased, however, with minutes saying that most members of the MPC acknowledged that further stimulus was likely to be warranted at some point.

The QE programme works by the Bank of England buying up bonds from banks and – to a lesser extent – the Government in the hope that the funds will trickle down to businesses and consumers.

While the panel was split on a further increase in its QE programme, there was broad agreement over the Bank's base rate of interest.

The rate has been frozen at 0.5% since March 2009, and all nine members of the MPC voted that it should remain at this level during June's meeting.

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