The Bank of England's rate-setting Monetary Policy Committee appears to be in no hurry to pump more money into the British economy as it assesses the impact of its recent stimulus in the face of rising concerns over the future of the eurozone, the country's most important trading bloc.
Minutes of its last meeting, published Wednesday, showed that the nine members voted unanimously to make no change to its October commitment to inject another 75 billion pounds ($117 billion) into the British economy. The MPC also voted to keep the benchmark interest rate at the all-time low of 0.5 percent.
The Bank has said it will take around three months to make the asset purchases as part of the program, known as quantitative easing. Under the program, the Bank creates money electronically to buy high quality assets, mainly government bonds but also corporate bonds. The intention is to reduce the cost of borrowing and get more money flowing in credit markets to support investment and stimulate demand.
The Bank backed another stimulus _ it halted the program in January 2010 _ even though inflation is running at 5 percent, more than double its 2 percent target. Rate-setters think that inflation will fall back next year partly because the British economy is not performing as strongly as expected.
Unemployment has risen to a 15-year high of 8.3 percent, while growth, though higher than expected at 0.5 percent in the third quarter, is expected to be muted. Last week, the Bank cut its growth forecast for 2012 from 2 percent to 1 percent.
Analysts believe that more stimulus is likely next year especially if the eurozone economy falls back into recession in the wake of a debt crisis that's shown signs of intensifying over the past few weeks. The rate-setters are clearly concerned about what's going on in the eurozone, indicating that it's the biggest cause for concern for the British economy.
"Concerns over the sustainability of the public and external debt positions of some euro-area countries had led to increases in the cost of borrowing for those countries and widespread falls in confidence," the minutes said.
"While the worst risks had not so far crystallized, the threat of their doing so had increased, exacerbating the already severe strains in bank funding markets and financial markets more generally," the minutes added.
The minutes said it was uncertain how the asset purchases would affect demand, and how much any increased spending would be blunted by government budget cutting, tight credit and restrained consumer demand.
The committee also noted, however, that the markets are already reacting to expectations of more stimulus within months.
"We stick with our call of another 50 billion pounds in February, but put the chances of any move before February as very low indeed," said Richard Barwell, an economist at Royal Bank of Scotland.