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| Bank split over money injection | |
| (30 minutes later) | |
| The Governor of the Bank of England, Mervyn King, wanted to pump more money into the UK economy this month but was outvoted by fellow policymakers. | The Governor of the Bank of England, Mervyn King, wanted to pump more money into the UK economy this month but was outvoted by fellow policymakers. |
| Minutes of the bank's Monetary Policy Committee (MPC) meeting on 6 August reveal that Mr King wanted £75bn rather than the £50bn that was injected. | Minutes of the bank's Monetary Policy Committee (MPC) meeting on 6 August reveal that Mr King wanted £75bn rather than the £50bn that was injected. |
| Two fellow committee members also voted for a bigger cash injection. | Two fellow committee members also voted for a bigger cash injection. |
| The decision to pump £50bn came as a surprise, and was already twice the £25bn that the market expected. | The decision to pump £50bn came as a surprise, and was already twice the £25bn that the market expected. |
| 'Additional measures' | 'Additional measures' |
| Following the committee's meeting earlier this month, the bank issued a statement saying that the UK recession "appears to have been deeper than previously thought". | Following the committee's meeting earlier this month, the bank issued a statement saying that the UK recession "appears to have been deeper than previously thought". |
| But the 6-3 split on the MPC shows that views within the bank differ on just how deep the recession is, and the outlook for inflation. | But the 6-3 split on the MPC shows that views within the bank differ on just how deep the recession is, and the outlook for inflation. |
| "It was surprising we had three members looking for £75bn," said analyst Peter Dixon at Commerzbank. | "It was surprising we had three members looking for £75bn," said analyst Peter Dixon at Commerzbank. |
| "This clearly suggests the bank is leaving the door open for additional measures should they feel need a rise. Quantitative easing is still very much in play." | |
| The bank has been pursuing a policy of pumping money into the economy - known as quantitative easing - by buying assets from financial institutions, in the hope that these institutions will then lend some of this money to businesses and individuals. | The bank has been pursuing a policy of pumping money into the economy - known as quantitative easing - by buying assets from financial institutions, in the hope that these institutions will then lend some of this money to businesses and individuals. |
| It hopes that this will, in turn, boost spending and help the economy emerge from recession. | It hopes that this will, in turn, boost spending and help the economy emerge from recession. |
| The bank originally set aside £150bn for this policy, but the decision to inject an extra £50bn took the total to £175bn. | The bank originally set aside £150bn for this policy, but the decision to inject an extra £50bn took the total to £175bn. |
| 'Promising signs' | |
| The committee noted that stock markets had "increased considerably", and that Libor, the rate at which banks lend to each other, had fallen. | |
| It also noted that there were "promising signs" that quantitative easing was "having a positive impact". | |
| But against this, the committee said that lending conditions remained tight, economic activity remained weak and the "recovery in global demand remained susceptible to further shocks". | |
| These factors would, it said, "most likely lead to a slow recovery in the level of economic activity", which meant further action needed to be taken. | |
| While six members of the committee voted for a £50bn expansion in quantitative easing, the governor, along with Tim Besley and David Miles, voted for a £75bn expansion. | |
| They argued that too little stimulation would mean inflation remaining below its target of 2% for "a sustained period of time... and might harm public confidence in the recovery, causing it to falter". | |
| They added that if £75bn proved to be too much, they could reverse the policy, by selling assets, and increase interest rates. | |
| All nine members of the committee voted in favour of keeping interest rates at 0.5%. |