The Bank of England has announced it will release £50bn of funds into the UK economy, in addition to keeping interest rates at an all-time low of 0.5%.
The Bank will raise the money through its: “Programme of asset purchases financed by the issuance of central bank reserves,” according to a statement - the process known as ‘Quantitive Easing’, a modern method of printing money, and brings the total generated to £125bn.
Since June 1 1998, the Bank’s Monetary Policy Committee has sole responsibility for setting interest rates to meet the Government’s inflation target of 2.5%.
In a statement, the Bank said: “The [Monetary Policy] Committee noted that the outlook for economic activity was dominated by two countervailing forces. The process of adjustment in train in the UK economy, as private saving rises and banks restructure their balance sheets, combined with weak global demand, will continue to act as a significant drag on economic activity.
“But pushing in the opposite direction, there is considerable economic stimulus stemming from the easing in monetary and fiscal policy, at home and abroad, the substantial depreciation in sterling, past falls in commodity prices, and actions by authorities internationally to improve the availability of credit. That stimulus should in due course lead to a recovery in economic growth, bringing inflation back towards the 2% target. But the timing and strength of that recovery is highly uncertain.”
The Bank will now: “Continue with its programme of purchases of government and corporate debt financed by the issuance of central bank reserves and to increase its size by £50bn to a total of £125bn. The Committee expected that it would take another three months to complete that programme, and it will keep the scale of the programme under review.”