All nine members of the Bank of England's Monetary Policy Committee voted this month not to expand the central bank's quantitative easing policy — dashing expectations that at least one might have called for more asset purchases.
Minutes of the MPC's Feb. 3-4 meeting also showed a unanimous vote in favour of leaving interest rates at a record low 0.5 percent, though the decision on whether to increase the 200 billion pounds ($313.7 billion) programme to pump money into the economy was "very finely balanced" for some MPC members.
Economists had expected that at least one MPC member — probably David Miles — would have voted for more QE given that the BoE's economic forecasts published last week show inflation undershooting its 2 percent target over the medium term.
But the minutes showed that while MPC members were concerned that inflation may be below target for much of the next three years, they were not sure how much they could fine-tune monetary policy and were still debating how past asset purchases would work through into the economy.
"All members felt that the arguments in favour of leaving the size of the asset purchase programme unchanged at this meeting were more persuasive. But for some members, the arguments were finely balanced," the minutes said.
Gilt futures pared gains modestly after the news, as at the margin, investors bet that a resumption of QE was less likely.
But analysts said nothing was certain.
"It's interesting that they noted it was very finely balanced for some members. So maybe the 9-0 exaggerates the degree of unanimity and actually it was a little bit more pivotal," said Ross Walker, UK economist at Royal Bank of Scotland.
The main arguments put forward for increasing QE were getting inflation back to target quicker and attenuating the long-term damage to the supply capacity of the British economy.
Against that, however, was the argument that inflation — which hit 3.5 percent in January — was well above target, and further QE would risk destabilising public expectations that the BoE was committed to getting inflation back to 2 percent.
"For some members, there also remained risks that adding to the size of the asset purchase programme might increase the chance of unwarranted increases in asset prices, and that attempting to eliminate the degree of spare capacity too rapidly might eventually result in more inflationary pressure," the minutes said.
Policymakers noted they would always be able to provide more monetary stimulus, should the outlook for inflation in the medium-term warrant it.
The BoE slashed rates to 0.5 percent and started its programme of asset purchases with newly created money in March 2009, when the economy at the depths of its worst recession in more than 50 years.
Growth has now resumed, but the BoE said it was disappointing and that there were significant headwinds to further expansion over the medium term.
Official data released at the same time as the minutes showed unemployment benefit claims rose by 23,500 in January, compared to economists' expectations of a 10,000 fall.
