Bank of England policymakers voted unanimously to leave the size of its asset purchase programme unchanged this month but had "differences of view" on the inflation outlook, minutes to the central bank's last policy meeting showed on Wednesday.
All nine policymakers voted to keep the quantitative easing programme at 175 billion pounds ($287.4 billion) and to hold interest rates at a record-low 0.5 percent, judging recent developments did not warrant any immediate change.
The BoE raised the total amount of funds for quantitative easing by 50 billion pounds to 175 billion in August, though Governor Mervyn King and two other policymakers had argued for a 75 billion increase.
Last month, the minutes reported that King still thought a larger increase in the programme could be justified. October's minutes made no mention of this.
"There were differences of view among members of the Committee on the balance of risks to the medium-term outlook for inflation and how it had shifted in recent months," the minutes said, noting that November's new growth and inflation forecasts would allow a fuller discussion.
"All Committee members, however, agreed that recent developments were not sufficiently compelling to justify revising the target level of asset purchases that had been agreed in the August meeting."
Sterling rose against the euro and the dollar and gilt futures extended losses after the minutes, which traders interpreted as making a further extension of the QE programme to pump money into the economy in November less likely.
"It does look like a bit of a signal they're not going to do anything in November," said Colin Ellis, economist at Daiwa Securities. "It's not so much the 9-0 vote as dropping the line that King felt the case for a bigger expansion was justified."
The minutes said the Monetary Policy Committee believed QE had had a welcome and substantial impact on asset prices since the programme was launched in March. Recent economic developments were also judged to have been positive.
"Asset price developments, including the rises equity prices and declines in short-term interest rates, and the sterling exchange rate, would provide a boost to output further out.
"The latest official data and the most recent surveys suggested that the level of output in the third quarter was likely to be close to the central projection in the August Inflation Report," the minutes said.
INFLATION SPLIT
The minutes did not go into detail about the MPC members' difference of views on the inflation outlook.
In line with other recent BoE statements it said inflation was likely to rise in the short-term because of base effects and a planned reversal of last year's cut in value-added tax.
But the medium-term outlook for inflation, which was critical for setting policy, would be largely unaffected by these short-term developments as inflation expectations appeared to be well-anchored.
The minutes noted there were still risks to growth from continued fragility in the banking sector as well as uncertainty over the global recovery, in particular whether better Asian demand would offset subdued U.S. consumer spending.
The outlook for consumer demand was clouded by uncertainty about how much more households would want to save in future, which in turn depended on levels of unemployment.
As with last month, there appeared to be no discussion of a change to the way in which commercial banks' reserves with the BoE are remunerated, an issue King had raised in parliamentary testimony in September.
