LONDON The Bank of England may not pump more money into the economy when it meets next week, but economists in a Reuters poll on Wednesday said there was an even chance it would restart the printing presses at some point in future.
Despite news of a slightly deeper recession since the Monetary Policy Committee last met, only 2 of 50 respondents in the poll said it was likely to add to the 325 billion pounds it has already printed when it meets on June 7.
Median readings from the poll taken this week said there was a 25 percent chance of additional money printing, or quantitative easing, next week and a 50 percent chance of more later.
"Recent comments from the majority of Monetary Policy Committee members are consistent with keeping the stance of policy on hold for now," said Philip Shaw at Investec.
"But the downside risks to both GDP and inflation stemming from events in the euro area are considerable, and we suspect that the committee will take out further insurance against a more protracted downturn by sanctioning more QE later this year."
At the start of 2012 Britain slipped into its second recession since the financial crisis. Growing signs that the euro zone economy - the country's main trading partner - is also worsening have stoked calls for the BoE to do more.
The economy is still feeling the benefit from the quantitative easing already conducted by the Bank, its chief economist, Spencer Dale, said on Tuesday. He predicted the economy would grow this year and said that inflation needs to come down further.
Inflation fell to its lowest in more than two years in April, to 3.0 percent from 3.5 percent in March, but that is still significantly above the Bank's 2.0 percent target.
It is falling more slowly than expected and is likely to stay around its current 3 percent level for most of 2012, MPC member Ben Broadbent said on Tuesday. A Reuters poll conducted earlier this month did not see it dropping back to target until at least 2014.
Calls for a policy response to ward off what is looking like more than a temporary economic slowdown are growing louder.
The BoE needs to print more money and possibly cut record-low rates as well, and the government should back off its austerity programme if things get worse, the International Monetary Fund said last week.
But how effective printing money has been in stimulating an economy that has fallen back into recession is up for debate.
"The benefits of higher QE for the real economy are marginal, and the longer-term risks of higher inflation cannot be shrugged off indefinitely," said David Kern, chief economist at the British Chambers of Commerce.
"But, if the euro zone crisis worsens and causes problems in the UK banking system, an increase in QE may be necessary."
None of the 64 economists polled see any further rate cuts. A handful expect higher rates early next year but the consensus is for Bank Rate to remain at 0.5 percent through the end of next year.
The Conservative-led coalition government has staked its political reputation on eliminating a budget deficit that was a record 11 percent of gross domestic product, in large part a result of part-nationalising RBS and Lloyds.
But public support for the policy has crumbled as Britons increasingly feel the pinch from recession and high inflation.
(Polling by Ruby Cherian and Rahul Karunakar)