MPC looked at further quantitative easing
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The minutes for the last Monetary Policy Committee meeting show that members considered further quantitative easing and that Andrew Sentance voted for an increase in the Bank of England base rate for the second consecutive month.
The minutes reveal that the committee considered boosting its QE programme, but decided that “the current level of bank rate and stock of asset purchases financed by the issuance of central bank reserves remained appropriate to meet the inflation target in the medium term”.
Sentance again voted for a 0.25 per cent rise in base rate, after voting for a rise in the June MPC meeting.
All the remaining MPC members voted for base rate to be held at 0.5 per cent and to continue with asset purchases of £200bn under quantitative easing.
The minutes note that one MPC member called for the withdrawal of some of the exceptional monetary stimulus provided by the easing in policy in late 2008 and 2009.
Speaking after the emergency Budget in June, Sentance stood by his call for interest rates to be raised, despite the Chancellor’s austerity measures.
In an interview with Reuters, he said: “I do not think it changes my view, partly because the tightening put forward in the Budget is not far off expectations before the Budget.”
He added: “I think it is desirable over this recovery to have a more gradual, gradualist approach to tightening policy. Now that would imply moving in small steps and gradually, because I think there is a risk if you start tightening sharply you risk knocking back private sector confidence, which is the last thing I would want to do.”
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Readers' comments (1)
Julian Stevens | 21 Jul 2010 5:08 pm
Maybe it's not such a bad thing to have someone on the MPC who doesn't merely go along with everyone else's thinking. He may be a minority, he may be wrong, he may be a dissenting voice, but at least he's there giving the others cause to consider their views a little more carefully. That's what democracy's all about ~ not that we get much of that in financial services, but that's another story and it's my birthday today so I'm going home.
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