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Bank rate setters split on more QE

Bank rate setters split on more QE

Category: Economy

Updated: 21/03/2012
First Published: 21/03/2012

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 It is now over 6 months old so the content may be out of date.

Two of the Bank of England's rate setting committee argued that quantitative easing (QE) should be further expanded this month, but found themselves outnumbered.

Official minutes from the March meeting of the Monetary Policy Committee (MPC) revealed that Adam Posen and David Miles voted to increase QE by £25 billion to £350 billion.

However, the remaining seven members of the MPC voted to maintain the size of the initiative at £325 billion.

The MPC had only just agreed to increase the size of QE by another £50 billion in February.

The QE initiative works by the Bank of England buying up bonds from the Government and the banks, with the end result being that funds trickle down into consumer and business lending.

The rate setting committee found themselves in unanimous agreement about interest rates during the meeting, with all nine members voting to maintain them at 0.5%.

During the monthly meeting the group discusses the state of the UK and wider economies.

It noted that the continuing threat of rising oil prices this month could slow down the recovery in the UK and further afield because of its effect on inflation.

It also said that growth was lower than expected last year, although inflation has fallen in line with its estimates.

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