The Bank of England has cut interest rates by 0.5 per cent to 0.5 per cent – yet another record low. The interest rate cut is the sixth cut since October. Of greater significance, the Bank has also begun quantitative easing – the process of printing money. £75 billion is to be created through the process, which will be used to buy government bonds and corporate debt over the course of the next three months. Chancellor Alistair Darling had previously given the go ahead for the bank to spend a total of £150 billion on asset purchases. The European Central Bank also cut interest rates by 0.5 per cent, to a record low of 1.5 per cent.
Tim Sutcliffe, of financial advisers Pi Financial, said, ‘The Bank of England is fast running out of options - with only one more 0.5% rate cut to fall back on, they are going to have to start looking for another battle plan. The switch to quantitative easing to manage money supply will help but only if they can achieve the right balance - aggressive enough to encourage lending by banks but not creating too much cash to send inflation out of control.’
Bank of England Begins Quantitative Easing
Financial Services > e-banking > Banking news
Bank of England Begins Quantitative Easing
Fri, 06 Mar 2009
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