(RTTNews) - All nine policy makers of the Bank of England unitedly voted in October to continue the bank’s quantitative easing measures and to retain the Bank Rate, the minutes of the meeting showed Wednesday.

The Monetary Policy Committee led by Governor Mervyn King unanimously decided to hold the interest rate at 0.5%, the lowest since the central bank was established in 1694. Also, all members voted to continue the asset purchase programme totaling GBP 175 billion using central bank reserves. The meeting was held on October 7 and 8.

In October, all members agreed that recent developments were not sufficiently compelling to justify revising the target level of asset purchases that had been set at the August meeting or to change the level of Bank Rate at the meeting, the minutes showed. However, there were differences of view among members of the committee on the balance of risks to the medium-term outlook for inflation and how it had shifted in recent months.

The next quarterly Inflation Report is due on November 11. The forecast round ahead of the November Inflation Report would provide an opportunity to assess more fully how the medium-term outlook for activity and inflation had evolved since August, the minutes revealed.

Initially, the central bank had introduced a GBP 75 billion programme of asset purchases on March 5. Later, the size of the quantitative easing was raised to GBP 125 billion on May 7 and again to GBP 175 billion on August 6. King and two others had sought a larger increase of GBP 75 billion to GBP 200 billion in August.

Afterwards, in September and October, policy makers unanimously voted to continue the GBP 175 billion quantitative easing. As on October 15, the central bank has purchased GBP 166.39 billion worth assets.

In October, members assessed that level of output in the third quarter was likely to be close to the central projection in the August Inflation Report. Asset price developments and falls in short-term interest rates and sterling exchange rate could provide a boost to output further out.

In the near-term, inflation is expected to rise as base effects from movements in petrol prices a year earlier fed through and in response to the planned reversal of the cut in VAT. But, the minutes showed that the medium-term outlook for inflation, which was critical for setting policy, would be largely unaffected by these short-term developments, provided inflation expectations remained anchored.

Yesterday, King said in a speech in Edinburgh that the crisis certainly suggested the need for additional policy tools that can moderate the growth of the financial sector and lean against the macroeconomic effects of the credit cycle.

The national debt is rising rapidly, not least as the consequence of support to the banking system. The cost of this crisis on the public finances would last for a generation, King added.

The Ernst & Young ITEM Club doubled the British economic growth outlook for 2010 to 1% from 0.5%. Nevertheless, the think tank sees an anaemic recovery as output scrapes along the bottom over the next eighteen months.

Earlier in the day, the National Institute of Economic and Social Research said the British economy would possibly recover in the fourth quarter of 2009. The think tank forecasts a contraction of 4.4% this year and predicts 1.3% growth next year.

UK GDP had showed a 0.6% shrinkage during the second quarter and 5.5% drop annually. The annual fall was the biggest since records began in 1955. The Office for National Statistics is slated to issue preliminary estimate for the third quarter GDP on October 23.

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