Bank's united front halted quantitative easing, MPC report shows

The Bank of England's cautious outlook for the British economy was confirmed yesterday in the minutes of the last Monetary Policy Committee and in the Bank's latest Agents Survey.

The minutes showed that MPC members voted unanimously to put the Bank's £200bn programme of quantitative easing on hold – but echoed the Inflation Report last week and remarks by the Governor, Mervyn King, that a return to QE should not be ruled out.

Analysts were surprised because the forecast of price rises had been lowered in the Inflation Report, and public statements by MPC members suggested greater dissent.

The minutes state that "for some members, the arguments were very finely balanced" on extending QE, so the unanimous vote may have been taken to present a united front rather than as a genuine reflection of the balance of opinion in the MPC, which divided three ways on the question of extending QE at its November meeting.

The weakness in the economy and risks to growth were also reflected in the Agents Survey, which collates the views of the Bank's regional agents.

The agents concluded that retailers enjoyed a solid Christmas, though January had seen a fall back; that the housing market continued to recover, though at a slower pace; and exports "continued to recover modestly".

But they added: "Reports of improved credit availability were more common among larger companies and those operating outside the property sector. Demand for finance remained weak."