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BOE Minutes Unveiled 2 Member Favored More Asset Purchases Print E-mail
Special Reports | Written by | Feb 22 12 10:54 GMT

BOE Minutes Unveiled 2 Member Favored More Asset Purchases

The BOE minutes for the February meeting unveiled that 2 (Adam Posen and David Miles) out of 9 members opted for more expansion in asset purchases than decided. The 2 dissenters to the current monetary policy saw a risk of a prolonged period of depressed demand which would cause inflation to fall materially below target in the medium-term. Also, the expected that further easing would alleviate the risks of increasing unemployment. The news raised speculations that the central may increase the amount of asset buying in May.

According the minutes, a majority of members believed that domestic and global economic data had “on balance been more positive than might have been anticipated towards the end of 2011, pointing to the possibility that growth might be stronger than expected in the near term”. Moreover, “it was not clear that a stimulus larger” than 50 billion pounds “was warranted at this juncture”. Concerning growth outlook, it would likely be “volatile in the near term given the impact of one-off factors... Thereafter growth should strengthen gradually, supported by a recovery in households'.

While most members voted to an increase of +50B pound on the asset buying program, the decision was not unanimous. Members favored more expansion on the asset buying program was that there remained “considerable margin of spare capacity remaining in the economy and the extent of deleveraging still likely to be required”. Policymakers worried that they might be “prolonged period of depressed demand causing inflation to fall materially below the target in the medium term” and “persistently weak growth” impairing the “future supply capacity of the economy”.

As the BOE viewed that substantial uncertainties remained around the path of inflation over the medium term, whether further addition is needed remains uncertain. However, with 2 members voting for addition of +75B pound, it appears possible that further easing is likely in coming months.

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