Two of the nine members of the Bank of England’s Monetary Policy Committee were outvoted at the committees last meeting when they sought to boost its stimulus to 75 billion pounds ($118 billion). The majority was concerned that such a move would cause alarm over the state of the economy and make it appear weaker than it was.
Bloomberg reported Wednesday that, in minutes released from the BoE meeting of Feb. 8-9, Adam Posen and David Miles proposed that, instead of a stimulus increase of 50 billion pounds to bring the overall amount to 325 billion pounds, a package of 75 billion pounds be authorized instead.
However, according to the minutes, the other members said that such a move “risked sending a signal that the committee thought the economic situation was weaker than it was.” The seven argued that “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.”
Posen and Miles had argued for the larger amount of 75 billion pounds of quantitative easing because of “the considerable margin of spare capacity remaining in the economy and the extent of deleveraging still likely to be required,” according to the minutes. They also said there was risk of a “prolonged period of depressed demand causing inflation to fall materially below” the 2% target rate set by the central bank.