–BOE MPC Voted 7-2 at July meeting for extra stg50bn QE
–BOE MPC Dale, Broadbent voted for unchanged QE at July meet

LONDON (MNI) – With UK growth possibly flatlining for the whole of
this year, and the economy taking a turn for the worse, Bank of England
Monetary Policy Committee members were united at their July meeting on
the need for more stimulus.

They split, however, over whether further quantitative easing was
needed in addition to the credit easing and liquidity insurance measures
the BOE had recently unveiled. The minutes showed seven members voted
for an extra Stg50 billion of QE and two, Chief Economist Spencer Dale
and Ben Broadbent, dissented, voting for unchanged policy.

For most MPC members the case for further QE was compelling and the
minutes showed they debated the merits of an extra Stg50 billion or
Stg75 billion.

The BOE had activated in Extended Term Collateral Repo facility to
provide liquidity insurance and plans to provide banks with cheap
funding if they boosted lending, the Funding for Lending Scheme, were
well advanced when the MPC met on July 4 and 5.

The debated hinged on how much more, if any, stimulus was needed in
addition to these schemes.

For the majority – “On balance, and in light of the potential
stimulus provided by the other recent and prospective policy
initiatives, these members judged that an additional Stg50 billion of
asset purchases was appropriate at this meeting,” the minutes said.

Dale and Broadbent, however, took the view that the balance of
risks around the inflation outlook had shifted less than their
colleagues thought since the May Inflation Report and enough stimulus
was on the way.

“They expected the policy initiatives announced during the month to
have a sufficiently large impact on the supply of credit and on economic
activity that no further stimulus was warranted at this meeting,” the
minutes said.

The July minutes highlighted the deterioration in the UK’s economic
outlook.

“It now seemed possible that output would be roughly flat over 2012
as a whole,” they said.

Back in May the MPC’s implied forecast was for 0.7% growth this
year.

The minutes also showed the MPC has not ruled out a cut in Bank
Rate from its current. They said the case against it was unchanged at
the July meeting but the FLS could alter things.

“The impact of the FLS and other policy initiatives might, in time,
alter the Committee’s assessment of the effectiveness of such a Rate
cut,” they said.

-London newsroom: Tel: +44 207 862 7491; e-mail:drobinson@marketnews.com

[TOPICS: M$$BE$,MT$$$$]