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Economy to get extra £50bn boost Economy to get extra £50bn boost
(10 minutes later)
The Bank of England has kept interest rates on hold at 0.5% and announced that it will pump an extra £50bn into the UK economy.The Bank of England has kept interest rates on hold at 0.5% and announced that it will pump an extra £50bn into the UK economy.
With little room for rate cuts the Bank has been pumping money into the banking system through quantitative easing.With little room for rate cuts the Bank has been pumping money into the banking system through quantitative easing.
The process involves the Bank effectively printing money to buy government and corporate bonds.The process involves the Bank effectively printing money to buy government and corporate bonds.
It has spent about £54bn so far and is on track to spend £75bn by June. It will now extend its spending to £125bn.It has spent about £54bn so far and is on track to spend £75bn by June. It will now extend its spending to £125bn.
The Bank of England had not been expected to announce an extension of the programme until at least next Wednesday when its latest set of economic forecasts is scheduled to be published.
There has also been some surprise that the programme has only been extended to £125bn, given that the Treasury has said the Bank of England can spend up to £150bn on quantitative easing.
"It may suggest they're reassured that the recovery is going to plan," Alan Clarke, an economist at BNP Paribas told the BBC.
The Bank's statement acknowledged that "the world economy remains in deep recession", but added that, "surveys at home and abroad show promising signs that the pace of decline has begun to moderate".