Bank increases quantitative easing

Date: 5th November 2009

Policymakers announced today that interest rates would be held at 0.5 per cent and that quantitative easing would be expanded from £175 billion to £200 billion.

The nine-member Monetary Policy Committee (MPC) voted to increase money-printing in order to stimulate credit conditions.

An increased cash supply could improve the availability of loans to businesses.

However, some economists have warned that quantitative easing can store up high inflation rates for the future.

The pound strengthened on the currency exchanges following news of the MPC vote.

Rishi Patel, analyst at FairFX.com, commented: "Policymakers are desperately trying to revive the economy through quantitative easing - the fundamental concern is if an increase of £25 billion will be sufficient."

Roger Sinclair at the Association of Mortgage Intermediaries said: "With the expectations that inflation will rise in the short term, the Bank still increased the quantitative easing programme, indicating that they remain concerned that the recovery is still struggling to gain traction."

Posted by Emma Clarke