Although it decided to hold the Bank of England’s asset purchasing programme at £200bn earlier this month, minutes revealed that continued turmoil in equity markets will prompt further quantitative easing.
“Most of the members thought it was increasingly probable that further asset purchases to loosen monetary conditions would become warranted at some point. Among the members voting to leave the stance of policy unchanged there were a number of considerations,” the minutes said.
Adam Posen was the only member to vote for a further bout of QE worth £50bn, the second time he has done so, against eight members who voted to maintain it at £200bn.
But the MPC suggested the Bank of England would be ready to act should market conditions deteriorate further.
The minutes said: “For most members, the decision of whether to embark on further monetary easing at this meeting was finely balanced since the weakness and stresses of the past month had significantly strengthened the case for an immediate resumption of asset purchases.
“For some members, a continuation of the conditions seen over the past month would probably be sufficient to justify an expansion of the asset purchase programme at a subsequent meeting.”
The minutes also said global and domestic growth was likely to be lower than anticipated in August’s Inflation report and CPI is likely to fall back to target from 4.4% in 2012.
The MPC voted unanimously in favour of holding rates at 0.5%.