LONDON (AP) — Minutes of the Bank of England's last rate-setting meeting suggest that the central bank is gearing up to pump billions more into a program to stimulate a faltering economy, but not yet.
Though American economist Adam Posen was alone among the nine members to vote in favor of resuming asset purchases, "most members" agreed that the case for more stimulus had strengthened in the past month, according to minutes of the September meeting of the Monetary Policy Committee, released Wednesday.
"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 program at a subsequent meeting," the minutes said.
All nine rate-setters also voted to keep the main interest rate unchanged at the record low of 0.5 percent.
Sterling tanked from $1.5681 to around $1.5620, an 8-month low, as markets priced in the likelihood of more monetary stimulus in the months to come. The program, known as quantitative easing, was halted in December 2009 after 200 billion pounds ($320 billion) had been splashed out buying financial assets from banks.
In a report published Monday, the Bank estimated that the previous monetary stimulus raised GDP by as much as 1.5 percent to 2 percent at the peak, while adding up to 1.5 percentage points to the inflation rate. The article added, however, that the impact was very difficult to measure.
The hint from the Bank that it may pump more money into the economy comes a day after the International Monetary Fund cut its growth forecast for the British economy to 1.1 percent this year from its previous forecast of 1.7 percent in April. It trimmed its prediction for next year from 2.3 percent growth to 1.6 percent. The IMF also urged the government to slow down its austerity measures should growth underperform expectations.