All nine members of the Bank of England's Monetary Policy Committee (MPC) voted in favour of the £75 billion expansion of the quantitative e…
All nine members of the Bank of England's Monetary Policy Committee (MPC) voted in favour of the £75 billion expansion of the quantitative easing (QE) scheme this month, it has been revealed.
Minutes of the October MPC meeting showed all members voted unanimously for the increase in asset purchases, as well as the retention of the 0.5 per cent base rate.
Concern over economic conditions that could leave more people needing debt help if they go on weakening prompted the move, with the committee noting the "underlying" rate of growth in the fourth quarter is set to be "close to zero".
This may suggest that if QE does not succeed in improving the health of the economy, the consequences will be more business failures, job losses and personal debt.
One possible concern about the increase in QE is that it will be inflationary, but the MPC stated that underlying causes of inflation are diminishing, such as commodity prices, with a prediction that the increase in the cost of living will decline in the months ahead.
This point was made again last night (October 18th) in a speech in Liverpool, by the Bank's governor Mervyn King.
He warned that action by the government and the Bank alone will not solve the key issue in the world economy, which he described as being "one of solvency not liquidity – solvency of banks and solvency of countries."
Mr King also said that for the UK, the eurozone crisis and its impact on both UK exports and the reduction of the deficit have "lengthened the period over which a return to normality is likely".
By Joe White