|The Bank of England has floated the idea of expanding the Government's £80bn flagship lending scheme, as rate-setters remained split on whether more quantitative easing would help the economy.
The minutes from April's Monetary Policy Committee (MPC) meeting showed that members "saw merit in possible extensions to the Funding for Lending Scheme (FLS) that would boost lending further."
Members said they believed that QE and stimulus from the FLS, which was launched in August, "were likely to support a gradual recovery".
"A strong possibility is that the FLS will be adjusted to specifically favour banks that increase their lending to smaller companies," said Howard Archer, an economist at IHS Global Insight.
Governor Sir Mervyn King, who retires at the end of June, was outvoted for a third consecutive month in calling for a £25bn increase in QE, as members voted 6-3 against expanding the programme from its current level of £375bn.
Members voted unanimously to hold interest rates at their record low of 0.5pc.
Vicky Redwood, UK economist at Capital Economics, said the minutes suggested that "even those voting against QE this month still seem open to further action to boost bank lending".
However, policymakers also said: "There had been some signs on the month that the pace of improvement in credit conditions had eased and net lending had so far remained subdued."
Bank of England data show that Britain's lenders cut lending to businesses and households by almost £2bn between August and the end of December, even as they drew £13.8bn from the state-backed scheme.
The FLS was designed to help the economy by using taxpayer subsidies to reduce banks’ funding costs by around one percentage point a year, which was supposed to be passed on to borrowers.
Ms Redwood said that while more QE was still possible in May, it was more likely that the stalemate would continue until the arrival of incoming Governor Mark Carney in July.
April's meeting was also the first since Chancellor George Osborne changed the Bank's mandate to give officials more flexibility to meet their 2pc inflation target.
The MPC said Mr Osborne’s move “confirmed” its decision to allow inflation to remain above target in order to support growth.
However, analysts raised further questions over the effectiveness of QE. Peter Dixon, an economist at Commerzbank, said:
"I wouldn't say the end of the road has come for QE but there was clearly a question mark about whether it's a policy that's going to take us forward.
"The six people who voted against changing the policy mandate are basically saying look, it's time to let the policy that we've put in place work through and see whether it does because there's no sense in throwing good money after bad. We've almost reached a point I think where monetary policy is not going to get us out of our predicament."
David Miles, an external member of the MPC, has called for more stimulus for six consecutive months, while Paul Fisher, the Bank's executive director of markets, has joined the Governor in voting for £25bn for the past three months.
Those opposed to more QE repeated their concerns that more stimulus could exacerbate a recent upward drift in inflation expectations.
Recent strong services and manufacturing data have contrasted with the continued weakness in Britain's construction sector, with the prospect of stagflation continuing to haunt the UK.
Inflation expectations, at 3.205pc, remain close to March's five-year high of 3.36pc, highlighting that some investors still fear that the UK could be simultaneously hit by stagnant growth and high inflation.
The Office for National Statistics releases its preliminary estimate of UK first quarter economic growth next week.
Most economists expect Britain to have eked out growth of 0.1pc in the first three months of the year, following the decline of 0.3pc in the final quarter of 2012.