Aug 1 2012
The BoE’s Monetary Policy Committee (MPC) decided to inject an extra £50bn into the British economy. However, two members of the MPC believed that the British economy needed a much bigger boost than the £50bn injection confirmed.
A vote for £75bn by Adam Posen and David Miles who are both external MPC members, lost by the majority of their seven colleagues, who all voted for the extra £50bn making a total quantitative easing (QE) of £325bn.
Analysts were surprised about the decision, which caused the pound to fall, as their expectations involved members to vote for a smaller rise. The decision caused the UK pound to plunge by 1.52 cents to $1.5668 and by 1.02 cents to €1.1825.
“The UK economy is still in a very precarious situation … there has not been much of a recovery from what has been one of the deepest recessions in the history of this country”, said David Miles in an interview with CNBC.
This comes as while Britain tries to distance itself from the eurozone, the single currency bloc is still its first trading partner which remains unstable due to fears of the likely return of the crisis.