The “MPC-ometer” wrongly suggested that a narrow majority would vote for more QE at this month’s meeting. Yesterday’s minutes, however, revealed a further significant dovish shift, with most members now inclined towards action.

Although Adam Posen remained isolated in the vote, “for most members, the decision of whether to embark on further monetary easing at this meeting was finely balanced”, while “for some members, a continuation of the conditions seen over the past month would probably be sufficient to justify an expansion of the asset purchase programme at a subsequent meeting”.

The European banking crisis, of course, has deepened since early September while domestic economic news has been mostly downbeat. An October QE2 launch, therefore, looks odds-on. Based on seven of the 12 inputs, the MPC-ometer continues to suggest a 6-3 majority in favour of action. The five yet to be released are unlikely to be any less dovish than last month.

The view here remains that UK economic woes reflect an inflation squeeze on real incomes and negative confidence effects from the eurocrisis rather than a shortage of money – a broad liquidity measure rose by a respectable 4.5% in the year to July. A further cash injection could prove counter-productive by triggering renewed downward pressure on the exchange rate, thereby boosting import prices and delaying much-needed inflation relief.