The Bank of England will introduce a further £50bn into the economy in an effort to get banks lending again, it was announced today.
The news came as the Bank confirmed the interest rate would be frozen at its all-time low of 0.5% this month.
The £50bn will add to the extra £75bn already injected into the system when the process of quantitative easing, effectively printing extra money to buy corporate and government bonds, first began in March.
Graeham Sampson, financial director at Montpelier Chartered Accountants, commented: “The decision to hold interest rates is the right one, as a further reduction would have offered little benefit or stimulus for the economy.
“The increase to the quantitative easing pot to £125bn is a welcome move for the financial markets, but it will take some time to filter through before the man on the street sees any real advantage.
“Some may even perceive the MPC’s latest attempt to breathe life into the economy as highlighting the uncertainty that still exists.”
© Crimson Business Ltd. 2009