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Two members of MPC wanted more QE
Two members of the Bank of England’s Monetary Policy Committee called for further stimulus to offset the UK’s lacklustre growth, the minutes of the latest meeting have revealed.
The MPC opted to leave rates on hold at record lows of 0.5% earlier this month, and left the quantitative easing programme at £325bn, despite the decline in GDP in Q4.
However, dovish David Miles and Adam Posen both called for a further £25bn of stimulus, warning the economy might be damaged over the long term if weak growth continues.
In the minutes it said: “Two members continued to think a larger monetary stimulus was warranted to reduce the risk persistently weak growth would damage the future supply capacity of the economy.
“In their view, policy should be loosened further to stimulate demand quickly, but the stimulus could then be withdrawn were it to become clear there was a significant risk of inflation rising above target in the medium term.”
However, the governor and the other six members of the MPC opted to maintain QE, arguing inflation and growth are in line with expectations.
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