LONDON (AP) — Bank of England rate-setters voted unanimously this month to inject more money into the struggling British economy, marking a sharp turnaround in sentiment.
Minutes of the October meeting released Wednesday showed that all nine members of the Monetary Policy Committee authorized 75 billion pounds ($118 billion) in asset purchases from financial institutions in the face of a gloomy outlook.
"The available indicators suggested that the underlying rate of growth had moderated and would be close to zero in the fourth quarter," the minutes said. Household spending and exports had slowed and the panel noted concern about the impact of the eurozone's debt crisis.
Hinting that more stimulus may be on the way, the minutes showed that that members even discussed possibly splashing out 100 billion pounds during their deliberations on Oct. 5 and Oct. 6.
"We continue to expect at least another 75 billion pounds extension of the program in February, and perhaps considerably more thereafter," said Jonathan Loynes, chief European economist at Capital Economics.
A month earlier, American economist Adam Posen was alone in advocating the move, which the Bank hopes will boost the money circulating in the economy and get banks lending more.
Britain's economy grew by just 0.1 percent in the second quarter, while unemployment has risen to a 15-year peak of 8.1 percent and inflation is at a three-year high of 5.2 percent.
The Bank of England pumped 200 billion pounds into its so-called quantitative easing program between March 2009, when it also dropped its base rate to an all-time low of 0.5 percent, and January 2010.
A recent Bank of England report concluded that the earlier round of quantitative easing had a positive impact, though the magnitude was impossible to quantify.
"There appeared to be no strong reason to expect the economic effect of further asset purchases to be materially different, but their impact would need to be kept under review," the minutes said.
In a speech Tuesday night, Bank of England Governor Mervyn King said the monetary stimulus would not solve underlying problems of indebtedness and an overlarge public sector.
"Providing liquidity to buy time to devise and put in place a coherent response to the underlying problem can be not only valuable but necessary," King said.
"Without monetary stimulus — low interest rates and large asset purchases — there is a risk that growth will stall and inflation fall below our symmetric 2 percent target," King added. "But easy monetary policy, by bringing forward spending from the future to the present, means that the ultimate adjustment of borrowing and spending will be even greater.