LONDON The Bank of England remained split this month on whether to restart its programme of asset purchases to boost Britain's economy, with no sign that divisions between policymakers are narrowing.
Minutes of the central bank's April 3-4 policy meeting showed that - as in February and March - Bank Governor Mervyn King and two colleagues backed an extra 25 billion pounds of bond purchases, while the other six members wished to leave the total unchanged at 375 billion pounds.
All voted to leave interest rates at their record low 0.5 percent.
Most economists expect the central bank to restart asset purchases later this year in the face of a stagnant economy, but Wednesday's minutes showed little sign that a change would come as soon as May, when the bank publishes new economic forecasts.
Those opposed to more asset purchases said for the first time that they were concerned more stimulus could exacerbate a recent upward drift in inflation expectations, as well as weaken sterling further.
"In addition, the extent to which supply capacity would respond to greater demand would depend on how quickly capital and labour could be redeployed from declining to growing businesses. This issue was better addressed by policies to improve the working of credit markets," the minutes said.
The Funding for Lending Scheme - which the government and the Bank launched in the middle of last year to boost bank lending - was having only a small impact so far on increasing lending, and had a diminishing impact on improving credit conditions, the minutes said.
Policymakers said they were open to expanding it further.
"The Committee also saw merit in possible extensions to the FLS that would boost lending further."
Members of the Monetary Policy Committee agreed that the outlook had changed little since February. Earlier signs that inflation might increase faster than forecast were offset by a fall over the past month in sterling oil prices and freezes to certain duties in March's annual budget.
Economic growth was likely to remain muted in the first half of 2013, they added.
Currently the central bank predicts inflation will exceed 3 percent later this year and take until early 2016 before it falls below its 2 percent target.
(Reporting by David Milliken and Shadia Nasralla)
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