BoE's Posen breaks ranks and votes for more stimulus

Bank of England rate-setter Adam Posen voted for an extra £50 billion to be pumped into the economy even as a fellow member of the Bank's Monetary Policy Committee, Andrew Sentance, voted to lift interest rates to 0.75%.

The minutes from the MPC meeting at the beginning of the month show one member of the committee - presumably Posen - believes that the downwards pressure on inflation means 'monetary policy could afford to encourage more rapid growth without risking an undesirable increase in underlying inflationary pressures.'

He warned without extra stimulus inflation would fall well below the target in the medium term.

But Andrew Sentance again voted for an interest rate increase from current record lows of 0.5% and the minutes show that he believes that inflation - already well above target at 3.1% - could increase in the months ahead as higher VAT and rising oil and commodity prices push prices higher.

'By failing to respond to persistent above-target inflation the Committee risked a loss of credibility that would be damaging to business and consumer confidence over the medium term,' Sentance said.

The seven other members voted for interest rates to stay where they are and for no further money to be used to boost the economy.