Members of MPC worried over the pound’s weakness

Governor Mervyn King, markets expert Paul Fisher and external member David Miles remained in a favour of a further £25bn of purchases that would take the total to £400bn, but could not convince their other six colleagues.

For now, policymakers expressed concern that more bond purchases could lead to an unjustified weakening of the pound – at odds with indications in past weeks that some would welcome a weaker currency to aid the country’s exporters.

“Further monetary stimulus... might also lead to an unwarranted depreciation of sterling if it were misinterpreted as a lack of commitment to maintaining low inflation over the medium term,” the minutes said.

Sterling rose more than a cent against the US dollar on the news, and 10-year gilts’ yield spread over Bunds widened by 2 basis points, as the minutes showed no increase in support for further bond purchases.

Earlier this month, sterling had been down as much as 8 per cent against the dollar since the start of the year, in part because of comments by Governor Mervyn King suggesting that a weaker pound would help Britain’s economy.

“The headlines seem distinctly less dovish and the warnings about the risks for the pound are interesting,” said Ross Walker, an economist at Royal Bank of Scotland.

“Previously they have given very little indication that they were in any way perturbed about a fairly marked depreciation in sterling, which of course serves as a green light to the forex markets to push it lower.”

The Bank of England is represented in Yorkshire and Humber by agent Juliette Healey, who gathers intelligence and feeds it back to the central bank.