Bank of England Governor Mervyn King and two other Monetary Policy Committee members wanted to raise the quantitative easing programme by £75 billion this month but were outvoted by the remaining 6 policymakers.
The 6-3 vote revealed in the minutes of the MPC's August 5th and 6th meeting published Wednesday - which showed Tim Besley and David Miles joining King's dissent - is likely to send shockwaves through markets which were expecting a unanimous vote in favour of the £50 billion decision.
If anything, analysts were predicting that any dissenters would have wanted a lower increase given the £50 billion rise was itself a massive jolt to markets which had been split over whether the BoE would increase at all.
This was only the third time that BoE Governor Mervyn King has been outvoted since he took office in July 2003 and is likely to raise expectations that the MPC could still increase the QE total further in coming months.
All members were agreed on keeping rates steady at 0.5 per cent and on the need for "substantial" further asset purchases.
But there were arguments for both a "considerable" and "more moderate expansion" of the QE programme.
Arguments for a big increase included: “The potential adverse consequences of adding another large monetary stimulus might be less severe than the possible costs of acting too cautiously.”
Also, if it were found that policy had been too expansive, it could be tightened by the combination of asset sales and increases in Bank Rate.
Against that, however, was the view that some of the most immediate downside risks to the economy had receded and there was a risk of an unwarranted increase in some asset prices that could prove costly to rectify.
Reuters