Quantitative easing programme extended

The Monetary Policy Committee has surprisingly announced it’s spending another £50bn on the scheme, which puts extra cash into the system through the purchase of government and corporate bonds.

This brings the total cost of the initative to £125bn.

CBI chief economic adviser Ian McCafferty says: “Quantitative easing is still in its very early stages, and we saw a positive response immediately after the bank began investing in gilts. For it to be fully effective, it should support money supply growth and broader lending, as well as boost liquidity.

“It will be some time before we have hard evidence of whether it is having the desired effects but more businesses are telling us they see some of the credit freeze starting to thaw and fewer of them report that conditions are getting worse.” 

The MPC also kept interest rates unchanged at 0.5 per cent. Meanwhile, Eurozone interest rates have been lowered to 1 per cent.

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