MPC doves spark Bank split with call for yet more QE

The Bank's monetary policy committee voted to pump an extra £50 billion into the economy through quantitative easing two weeks ago, taking the total to £325 billion so far.

But dovish Adam Posen and David Miles, pictured, urged colleagues to do even more and called for another £75 billion, minutes of their latest meeting revealed.

The widening fissures on the nine-strong MPC were underlined as "some members" - likely to be hawkish Bank chief economist Spencer Dale and Martin Weale - argued a "case could be made" for taking no action at all, although for other members the need to do more "was clear-cut".

The gloomier tone of the minutes put a dampener on a strong run of news for the economy, including a manufacturing bounceback and an apparent High Street sales revival in January.

The pound immediately dipped nearly a cent below $1.57 against the dollar following the news as Miles' vote caught markets off-guard.

The rate-setter last showed his dovish leanings in November 2009 when voting for a bigger dose of QE than the £25 billion eventually agreed.

"We had thought Posen might do this, but Miles is a surprise," said Vicky Redwood, chief UK economist at Capital Economics.

Deutsche Bank's chief economist George Buckley added: "What this tells us is that there is a greater chance the MPC could do another £25 billion of QE in May."

Posen and Miles are worried that "persistently weak" growth will wreak permanent damage by hitting the economy's ability to expand, and warned of a "prolonged period of depressed demand". But after recent better news from the UK and abroad, the majority argued that a £75 billion move would signal the MPC believed the recovery was weaker than it actually was.

Financial information firm Markit's latest February survey highlighted the Bank's belief that Europe's debt crisis remains the biggest risk to the recovery as it showed declining activity among eurozone businesses.

Chief economist Chris Williamson said: "Although business conditions are showing signs of stabilising so far this year... the eurozone is by no means out of the woods."