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BoE MPC voted 9-0 to keep QE at 175 bln
LONDON (Reuters) - Bank of England policymakers voted unanimously to keep their asset purchase programme at 175 billion pounds in September, but those who had voted for more in August still thought they had a case, their minutes showed on Wednesday.
All nine policymakers also voted to hold interest rates at 0.5 percent and did not think there had been enough major economic developments to warrant any change to the 50 billion pound expansion of quantitative easing agreed in August.
"For those members who had preferred a larger stimulus at the August meeting, a larger asset purchase programme could still be justified," the minutes said.
"But in the absence of significant news about the medium term the case for adjusting the policy now was outweighed by the benefits of following through with the programme of asset purchases announced in August."
Three policymakers, Governor Mervyn King, Timothy Besley and David Miles, had wanted to increase QE to a total of 200 billion pounds in August.
There was no indication in the minutes that policymakers had discussed cutting the remuneration rate of commercial banks' deposits with the BoE -- an issue that Governor Mervyn King had raised in parliamentary testimony last week.
Policymakers said the near-term downside risks to growth had lessened over the month and inflation was likely to be higher in the short term than they had thought a month ago.
However, the medium-term inflation outlook had not really changed because of the large amount of spare capacity in the economy.
"Even if GDP had turned positive in Q3, it was unlikely to have reached the point where the level of spare capacity was shrinking. Unemployment continued to rise and was likely to continue increasing for some time."
Policymakers felt that rising asset prices and the weaker pound -- as well as lower gilt yields, market interest rate expectations and interbank lending rates -- would help support nominal spending in due course.
But they also warned that past financial crises had not been resolved quickly and there was a risk of a false dawn.
"High levels of public debt internationally and the persistence of global imbalances remained downside risks to the sustainability of the recovery."