MPC unites over scale of Bank stimulus
BANK of England policymakers voted unanimously this month to keep the total amount of quantitative easing at the £175bn agreed in August, minutes of this month’s Monetary Policy Meeting showed yesterday.
The minutes of the BoE’s September meeting showed that Mervyn King and external MPC member David Miles voted with the rest of their colleagues unlike the previous month when they voted for greater easing.
“For those members who had preferred a larger stimulus at the August meeting, a larger asset purchase programme could still be justified.”
“But in the absence of significant news about the medium term the case for adjusting the policy now was outweighed by the benefits of following through with the programme of asset purchases announced in August.”
New MPC member Adam Posen — who replaced Timothy Besley, the other supporter of going to £200bn in QE — also voted in favour of sticking with the plan, leading to a 9-0 vote in favour of it.
King, Miles and Besley had wanted to expand the programme to £200bn in August, arguing that the risk of doing too little to prop the economy outweighed that of doing too much.
Former MPC member David Blanchflower, meanwhile, warned that unemployment could go to five million under proposals being advocated by the Conservative party.
Writing in New Statesman magazine, Blanchflower said: “If large numbers of public sector workers, perhaps as many as a million, are made redundant and there are substantial cuts in public spending in 2010, as proposed by some in the Conservative Party, five million unemployed or more is not inconceivable. They could be our lost generation.”