Monetary Policy Committee Voted Against Expanding the Quantitative Easing
The Governor of Bank of England, Sir Mervyn King voted in favor of expanding the quantitative easing along with Paul Fisher and David Miles. However, the rest of the six members from the Monetary Policy Committee voted against them.
The three wanted to increase the target for bond purchases by Â£25bn from its current level of Â£375bn to Â£400bn.
MPC's meeting outvoted the expanding of quantitative easing, which has taken a toll on pound against other currencies. The pound was down by 0.7% at $1.5325 against the dollar and sterling was down by 0.9% to 1.1420 euros. There are raising concerns over the economy of the UK as it may go back in recession the economy contracts in the first quarter of 2013.
MPC is likely to take measures so as to improve economic situation and boost credit. The inflation is expected to remain above 2% for the next two years.
On the case for more quantitative easing, the minutes said, "The degree of slack in the economy, and the likely positive response of supply capacity to increased demand, meant that higher output growth would not necessarily lead to any material additional inflationary pressure".
Moreover, it said, this could bring the balance in the economy and avoid lasting obstacles in the way of productive capacity and increased rates of unemployment.