MPC minutes: split emerges on QE as Miles wants more

David Miles and Adam Posen voted in favour of the Bank of England boosting its easing programme by £75 billion rather than the £50 billion announced, hinting the MPC's appetite for quantitative easing (QE) is growing.

February’s UK monetary policy committee (MPC) notes revealed that not only did all of the bank's policy setters vote to extend its easing programme, but that Miles and Posen – voted for a larger increase.

While Posen's (pictured) stance will not come as a shock to most economic commentators, Miles' may be more of a surprise because his views on additional QE have historically been less clear-cut.

While the Bank of England's Inflation Report, issued last week, suggested that significant additional easing is unlikely to be on the cards, one of the arguments for increasing the Bank's programme by £50 billion rather than £75 billion was that too large a liquidity injection could send out an overly negative message about the UK's economy.

However, as economists pointed out at the time the MPC’s forecasts on growth and inflation are based on optimistic expectations that most doubt will be met.

Capital Economics falls into this camp and said that more easing is likely over the shorter term, despite signs of an easing in inflationary pressures.

'We doubt that these [expectations] will be met, meaning that more QE will still be necessary to stop inflation undershooting its target,' Capital's chief UK economist Vicky Redwood said.