Policymakers were at their most divided over Britain’s super-loose monetary policy when they split three ways this month on whether to push ahead with creating more money.

While seven of the nine members of the Bank of England’s Monetary Policy Committee (MPC) voted for £25 billion of additional stimulus, one wanted a £40 billion boost and another none at all, according to minutes of the meeting published yesterday.

The pound dived by as much as half a cent against the dollar as traders interpreted the latest minutes as doveish, especially as, for the first time, the committee had debated the additional measure of cutting the interest rate that it pays on bank deposits held at the Bank of England. The minutes suggested that the door to further loosening of policy was “still slightly ajar”, according to Jonathan Loynes, of Capital Economics, the consultancy.

The arch-dove on the MPC was David Miles, who called for a £40 billion boost to provide greater insurance against the risks to growth. The committee had been surprised by the third-quarter national output figure, which revealed that Britain, almost alone among leading Western economies, remained in recession.

Spencer Dale, the Bank’s chief economist, called for no extra stimulus at all. He said that policy was “already extraordinarily stimulatory” and that further injections of liquidity might trigger unwarranted rises in some asset prices. In the middle were the other MPC members, who voted for an extra £25 billion, boosting the total stimulus agreed this year to £200 billion.

The Bank, concerned about the risk of a dangerous deflationary spiral, embarked on the policy known as quantitative easing (QE) in March after running out of scope to cut interest rates any further, with the base rate down to a 315-year low of 0.5 per cent.

It began to buy government bonds and other assets as a means of boosting the money in circulation in the economy and so helping to stimulate activity. So far the Bank, which aims to keep inflation as close to 2 per cent as possible, has implemented £200 billion of QE — equivalent to 16 per cent of GDP. The majority on the committee argued for the extra stimulus because credit was likely to remain tight, firms and households were likely to remain uncertain and fiscal policy was likely to be tightened.

The idea of cutting the interest paid to banks on a proportion of their reserves deposited at the bank — to encourage them to lend more — was also discussed, but QE was seen as a more effective tool. However, the committee agreed that it might be a useful policy tool in some circumstances and should be available in future.

Mr Dale’s concern about the effect on asset prices was in direct contrast to the stance of Mervyn King, the Bank’s Governor, who said last week that it would be “peculiar” to worry about asset prices at this time.

Figures from the CBI yesterday pointed to an anaemic recovery, with a net balance of 4 per cent of employers expecting to boost output over the next three months. In its monthly industrial trends survey, the CBI reported slight improvements in expectations for exports and for order books, albeit from very low levels.

Ian McCafferty, chief economist at the CBI, said: “Manufacturers have had another testing month, though conditions are not quite as bleak as they have been for much of 2009.”

The pound fell to as low as $1.6764 but later rallied to $1.68.

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats