The Bank of England was split three ways in its last meeting on interest rates and QE, with two rogue members voting to change the path of monetary policy.
As expected, hawk Andrew Sentance preferred an increase in bank rate of 25 basis points, while dove Adam Posen voted to increase the size of the asset purchase programme by £50bn.
Sentance says although some slowdown in growth might be occurring in the UK and overseas, he believes it must be viewed alongside the strong momentum of growth in the first half of the year.
"In the view of this member (Sentence), by failing to respond to persistent above-target inflation, which was forecast to continue for some time, the Committee risked a loss of credibility that would be damaging to business and consumer confidence over the medium term," the MPC minutes reveal.
As for Posen, he believes an increase in QE would reduce the risk of deflationary pressures once temporary inflation factors dissipate.
"In this member's view (Posen), the current degree of spare capacity in the economy was sufficiently large that monetary policy could afford to encourage more rapid growth without risking an undesirable increase in underlying inflationary pressures," the minutes read.
"Absent such additional stimulus, inflation would fall well below the target in the medium term.
"And the stability of measures of inflation expectations and wages over several months indicated that the likelihood of their rising sufficiently to cause an overshoot of the inflation target in the medium term was smaller than previously feared."
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