Bank of England Governor Mervyn King was defeated in a push for more stimulus this month as officials considered options including a rate cut and expanding the range of assets purchased as ways to help the economy.
King, Paul Fisher and David Miles wanted to increase the target for bond purchases by 25 billion pounds ($38 billion) to 400 billion pounds on Feb. 7, though they were outvoted by the remaining six members of the Monetary Policy Committee. The pound fell after the release of the minutes in London today.
Officials said they “stand ready” to increase quantitative easing to support the recovery, though they still questioned the effectiveness of current policy tools for easing credit strains in the economy. In a wide-ranging discussion on the need for “targeted” measures, they said some may be beyond the scope of the central bank and fall under the province of other government departments.
“Growth remained subdued and the economy continued to face a number of headwinds,” the MPC said. “A case could be made that, if further stimulus was required, policy interventions more targeted at particular frictions or market failures in the economy were likely to be more effective in current conditions than further asset purchases”
The pound tumbled to a 15-month low against the euro after the minutes and fell to the lowest since June versus the dollar. It depreciated 0.7 percent to 87.48 pence per euro as of 12:30 p.m. London time and fell 0.9 percent to $1.5292.
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