Bank of England injects £75bn into economy

The Bank of England has decided to pump out another £75 billion of stimulus under its quantitative easing policy and held interest rates at a record low 0.5 percent to revitalize Britain's economy. "The Bank of England's Monetary Policy Committee today voted to maintain the official bank rate paid on commercial bank reserves at 0.5 percent," it said in an official statement. "The Committee also voted to increase the size of its asset purchase programme financed by the issuance of central bank reserves, by £75 billion (86 billion euros, $115 billion) to a total of £275 billion." The decision to hold interest rates had been widely expected, while many economists had forecast more stimulus measures as the country's economic recovery falters. The announcement came one day after official data showed the British economy had flat lined over the past nine months and that the 2008/2009 recession was worse than previously thought. The Bank of England said on Thursday that Britain's recovery was also endangered by a flat world economy and raging eurozone debt crisis. "The pace of global expansion has slackened, especially in the United Kingdom's main export markets," the central bank said. "Vulnerabilities associated with the indebtedness of some euro-area sovereigns and banks have resulted in severe strains in bank funding markets and financial markets more generally. These tensions in the world economy threaten the UK recovery." The BoE's key interest rate has stood at 0.50 percent since March 2009, when the bank also decided to begin injecting £200 billion into the economy under quantitative easing. Under QE, a central bank pumps out new cash by purchasing assets such as government and corporate bonds in a bid to encourage lending and in turn boost economic activity. Thursday's announcement marked the first change to QE since November 2009.