Bank debated action to boost economy

Minutes of the Bank's July interest rates meeting showed the Monetary Policy Committee (MPC) looked at the need for more quantitative easing (QE) and said the Chancellor's Budget had hit the outlook for UK growth.

The MPC also noted signs that the global recovery was running out of steam.

Members opted to keep rates and QE on hold, although the minutes confirmed the latest call by member Andrew Sentance that rates should be raised by a quarter point to rein in inflation.

Details of the MPC's discussion of more help for the economy follow comments yesterday from member Adam Posen stating that there was a "more than 50 per cent" chance of extending QE.

The minutes showed the committee weighing up the threat of higher-than-forecast inflation with a stuttering economic recovery.

Inflation fell to 3.2 per cent in June, but remains above the Bank's 2 per cent target, and the MPC said it was likely to be higher than the Bank had expected for the rest of 2010.

The MPC, which voted seven to one to keep monetary policy on hold this month, concluded the "substantial margin of spare capacity was likely to persist for some time".