All nine Bank of England policymakers backed this month's decision to expand its quantitative easing programme by £50 billion after mulling an even bigger move to pull Britain out of recession.
Minutes of their May 6th to 7th meeting published today policymakers immediately raised speculation the central bank would boost its asset-buying programme in the next few months, to the maximum 150 billion pounds, or perhaps even more.
"There is a clear bias to do more in terms of asset purchases and if conditions deteriorate, the Monetary Policy Committee will ask the Chancellor to increase the upper limit for QE - £150 billion is not a line in the sand," said Brian Hilliard, chief UK economist at Societe Generale.
The BoE cut interest rates to a record low of 0.5 per cent in March and started an unprecedented £75 billion programme of asset purchases of mostly gilts to keep credit flowing as Britain faces its bleakest economic outlook in 60 years.
Two months into the programme, policymakers voted unanimously to increase the total by £50 billion to £125 billion but thought about expanding it by the full £75 billion available to it. The BoE has the leeway to ask the government for more.
All MPC members felt more monetary stimulus was needed this month. Some thought the economic outlook warranted just £50 billion of more asset-buying in addition to the £75 billion committed to in March.
"For other members, a case could be made for the larger stimulus. But as the precise amount that would ultimately be required was so uncertain, there was no pressing need for the larger extension," the minutes said.
Policymakers said they would keep the total under review at each meeting and the amount of assets could then be increased or decreased as appropriate.
There was a case made for not extending the QE programme at all given the uncertainty about its effectiveness at stimulating demand and that there were signs that economic conditions were already starting to improve.
Policymakers were also worried that uncertainties of how QE worked might also mean they would not be able to spot soon enough when they should remove monetary stimulus but in the end arguments for boosting the economy won out.
Reuters