Bank looked at more quantitative easing as fears for recovery increased

Minutes of the bank's August interest rate meeting showed the monetary policy committee discussed the need for more quantitative easing (QE) but opted to keep its programme to boost the money supply at 200bn.

Members voted 8-1 to leave interest rates at a record low of 0.5 per cent, although the minutes revealed they also considered the arguments in favour of a small increase from the current "exceptionally low" level. Andrew Sentance remained the only member on the committee to vote in favour of a rise to 0.75 per cent.

Details of the MPC's discussion came a day after figures revealed inflation had edged down from 3.2 per cent to 3.1 per cent – still well above the bank's 2 per cent target. The committee said that in the last month surveys had suggested a softening in business and consumer sentiment. And while growth in the second quarter was "surprisingly robust" it had also been erratic, the minutes added.

The committee considered arguments for further QE because credit conditions seemed set to remain tighter for longer than expected and there were suggestions of a slowing in output growth.

However, Mr Sentance argued that the economic conditions had improved over the past 12 months and that the inflation outlook had shifted sufficiently to begin the gradual process of raising rates.

He added that figures from the second quarter suggested the UK recovery was gathering momentum.

The minutes noted that UK inflation had been above target in all bar nine of the past 50 months.