–Adds Detail To Version Transmitted At 0830 GMT
–8 BOE MPC Voted For Unchanged QE; Posen Voted for Stg50bln Increase
–Most No Change MPC: Increasingly Likely More QE Would Be Needed
–Most No Change MPC: Case for More QE Significantly Strengthened

LONDON (MNI) – Only Bank of England Monetary Policy Committee
member Adam Posen voted to extend quantitative easing at the MPC’s
September meeting, but most of the no policy change camp said the
decision was finely balanced and the case for more QE had strengthened.

While the vote was unchanged from August, the minutes leave the
door wide open to more QE, with some MPC members saying if the events of
the past month were repeated this could justify further QE.

Analysts median forecast was that one other MPC member would have
joined Posen in backing more QE, but while the vote was less dovish than
expected, the debate showed the MPC debating a range of options to ease
policy, and concluding none of them was preferable to more QE.

“For most members the decision whether to embark on further
monetary easing at this meeting was finely balanced since the weaknesses
and stresses of the past month had significantly strengthened the case
for an immediate resumption of asset purchases,” the minutes said.

“For some members, a continuation of the conditions seen over the
past month would probably be sufficient to justify an expansion of the
asset purchase programme at a subsequent meeting,” the minutes said.

The reasons the majority held off from backing more QE in September
including the risk of “easing policy during a period of sustained above
target inflation” and “concerns about how quickly inflation would fall
back to target.”

The MPC agreed, however, that the downside inflation risks had
clearly increased.

The committee cited the weakness in global activity indicators and
“renewed concerns about the resilience of the financial systems” along
with the risk from euro-area sovereign debt.

The MPC noted the risk of a renewal of the banking crisis.

“If recent conditions in capital markets persisted, European banks
could face difficulties obtaining sufficient funding to continue current
levels of lending. These conditions could affect UK banks,” the minutes
said.

The knock-on effect of this could be slower growth in lending and
and a hit on activity.

In light of the deterioration in the inflation outlook the MPC
looked at range of possible ways to ease policy.

Among the policy options the MPC discussed were changing the
maturity profile of those assets held in its Asset Purchase Facility,
cutting Bank Rate below 0.5% and providing “explicit guidance about the
likely path of Bank Rate.”

The latter policy resembles the Federal Reserve’s “low for long”
option and the APF maturity profile appears similar to a Fed “twist”
policy.

The MPC concluded, however, that none of these policy options
“would be preferable to a policy of further asset purchases (QE).”

–London newsroom: tel+44 207 862 7491; email: drobinson@marketnews.com

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