Bank agrees £25bn stimulus to kick-start economy
The Bank of England has confirmed that it will inject an extra £25 billion into its quantitative easing programme in a bid to haul
In a letter to the Chancellor, the Bank’s Governor, Mervyn King, requested permission to print more money to help stimulate economic growth. The extra £25bn will be used to buy assets from banks and other companies over the next three months.
On the same day the Monetary Policy Committee voted to hold interest rates at 0.5% for the eighth consecutive month.
‘Households have reduced their spending substantially and business investment has fallen especially sharply,’ Mr King wrote to Mr Darling. ‘A number of indicators of spending and confidence, however, suggest that a pickup in economic activity may soon be evident.’
The latest cash boost means the Bank has now spent £200bn on quantitative easing.
Business groups have largely welcomed the decision. ‘Extending quantitative easing ought to provide an extra degree of support for business and consumer confidence,’ commented Ian McCafferty, from the Confederation of British Industry.
David Kern, Chief Economist at the British Chambers of Commerce, also applauded the move, but added that he was ‘disappointed that the MPC [had] not taken more specific measures aimed at stimulating bank lending to companies.’
‘It is important for the MPC and the Government to act decisively in order to unblock obstacles to bank lending. One critical factor delaying