However, the Committee also hinted at further Quantitative Easing early next year.
In October, the Bank ramped up its QE scheme by £75bn amid turbulent economic conditions. Members resisted a new round of stimulus this month, but the minutes noted a further expansion of QE may be warranted soon.
According to this month’s Minutes the euro continued to present substantial challenges for the United Kingdom.
The members felt the worst risks had not materialised yet, but the possibility they will was reflected in continuing strains in bank funding markets and market volatility.
Inflation may also be slower to fall, concluded the members, although the continued strength in import and goods prices could temper the Committee’s original projections.
The Committee is concerned that economic demand is unlikely to rise to meet spare capacity, which will push inflation below the target in the medium term.
Business surveys suggest the outlook for the fourth quarter and for the first part of 2012 will remain broadly flat. The weakening in employment was consistent with that picture, it concluded.
However, the Committee said it expects some recovery in the latter part of 2012.
Howard Archer, chief UK & European economist, said: “The minutes of the December meeting of the Bank of England’s Monetary Policy Committee essentially support belief that further Quantitative Easing is highly likely early in 2012.
However, the fact that all nine MPC members favoured sticking to the current QE path at their December meeting suggests that they are likely to delay acting again until February when October’s £75bn extension to the QE programme will have been completed.”
He added: “Events in the Eurozone are still seen posing serious downside risks to the outlook.”
