The £50 bn of extra cash means that the total injection of the scheme will amount to £175 bn when it is complete. The call for £75 bn of extra cash came as a surprise to the market as it had been widely expecting only £25 bn extra ahead of the meeting. The concern amongst some members of the committee is that inflation will undershoot it's 2% target, however the latest inflation figures published earlier this week must have given some satisfaction to the majority who voted for the lower £50 bn injection.
The minutes reveal that the Committee agreed to spread the additional purchases of £50 billion evenly over three months so that their completion would coincide with the preparation of the November Inflation Report projections. Nevertheless, the scale of the asset purchase programme would continue to be reviewed every month in the light of economic developments. The Committee noted that the increase in the scale of its asset purchase programme required an increase in the range of maturities of government debt that the Bank was willing to acquire to include all conventional gilts with a minimum residual maturity of greater than three years.
RLAM's Economist, Ian Kernohan, commented: "Yet another surprise for the market, with the giant experiment in UK monetary policy making being anything but boring.
It's clear that the bias on the MPC is to err on the side of risking higher inflation, an outcome they feel they can deal with, in order to avoid the deflation trap, which they would find much harder to tackle. Expect more excitement next year, when they attempt a smooth exit from all this monetary largesse."
