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More cash to battle UK recession

More cash to battle UK recession article image

The Bank of England will release an additional 50 billion in sterling, raising the total flood of new cash to 125 billion sterling (A$253 billion). The Bank of England's Monetary Policy Committee voted "to continue with its program of asset purchases financed by the issuance of central bank reserves and to increase its size by STG50 billion to a total of STG125 billion" after it kept the interest rate at 0.5 percent. The unexpected move has been designed to boost bank lending during the UK recession, which some analysts say represents the Bank's last chance at stimulating the economy. Expanding its quantitative easing program indicates that the Bank believe the economy "still needs support, despite recent mounting signs that the rate of economic decline is moderating," remarked Howard Archer, economist at IHS Global Insight consultancy. The first quarter of 2009 showed a 1.9 percent fall in output.

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