21/09/2011 07:07 BST | Updated 21/11/2011 05:12 GMT

Bank Of England Committee Considered Interest Rate Cut

Bank of England policymakers are moving closer to taking further emergency action to jumpstart the UK recovery in the face of a "marked deterioration" in the economic outlook, documents have revealed.

The majority of the Bank's Monetary Policy Committee (MPC) believe the case for increasing its quantitative easing (QE) programme - injecting cash into the economy to stimulate growth - strengthened in the month running up to its September meeting.

The MPC even considered cutting interest rates below their current record low of 0.5%, minutes from the September meeting revealed, but members decided this would not be preferable to further QE.

A raft of disappointing economic surveys - especially in the services sector - pointed to weaker growth in the second half of the year than the MPC had predicted in its key inflation report last month.

The MPC voted eight to one in favour of holding its QE, or asset purchases, programme at its current level of £200 billion, with external member Adam Posen reiterating his call to boost the stock by another £50 billion. All members voted in favour of holding interest rates.

The September minutes are the clearest signal yet that the Bank fears the UK economy is heading towards the rocks and will raise fears that the country is lurching towards a double-dip recession.

Global growth fears were fuelled throughout August as the euro-zone debt crisis rumbled on, further cracks emerged in the US economy and soft manufacturing, services and trade figures were published in the UK.

The Bank documents were published a day after the International Monetary Fund (IMF) warned that the global economy had entered a "dangerous new phase" and slashed its growth forecasts for the UK, euro-zone and US.

The IMF's World Economic Outlook, published after the MPC held its meeting, estimates the UK will grow at 1.1%, down from 1.5% forecast in June and much lower than the 1.7% predicted by the Office for Budget Responsibility (OBR).

The minutes gave no hint as to exactly when the Bank might fire up its printing presses again but said a continuation of the current weak economic conditions would be enough to justify further QE at a "subsequent meeting".