The bank announced Aug. 6 that it was expanding the size of the asset-purchase program by 50 billion pounds ($82 billion) to 175 billion pounds, catching financial markets off guard amid expectations the BOE would either put its quantitative-easing program on pause or expand it by no more than 25 billion pounds. In another surprise, the minutes revealed that the move was approved in a 6-3 vote, with King and MPC members Tim Besley and David Miles voting against it. They preferred to increase the program by 75 billion pounds to a total of 200 billion pounds, the minutes showed. "The potential adverse consequences of adding another large monetary stimulus might be less severe than the possible costs of acting too cautiously," they argued, according to the minutes. "Insufficiently stimulatory monetary policy would cause inflation to remain below the target for a sustained period of time, depressing inflation expectations and might harm public confidence in the recovery causing it to falter." But arguments for a more modest expansion won the day. Advocates for the smaller increase argued that immediate downside economic risks "seemed to have receded" and that the channels through which large-scale asset purchases affected the economy were uncertain. "The substantial injections of liquidity into the economy might result in unwarranted increases in some asset prices that could prove costly to rectify or in inflation expectations moving upwards," they argued, according to the minutes. "Moreover, if the asset purchases proved to be more effective than anticipated, an early withdrawal of some of the monetary stimulus might prompt a sharp rise in market interest rates that was unwarranted by the economic outlook," they argued.

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