Quantitative easing extended by GBP 50bn
7th August 2009
The Bank of England has increased the size of its quantitative easing investment by a further GBP 50 billion.
Members of the Monetary Policy Committee (MPC) had already received permission from the Treasury to increase the total asset purchase programme by a further GBP 25 billion.
However, the MPC felt in necessary to increase investment further, prompted by the Consumer Price Index falling back to 1.8 per cent in June, below the two per cent target.
The base rate of interest was also maintained at 0.5 per cent, with both measures intended to curb the impact of the recession on inflation.
In his response to chairman Mervyn King's request to extend the asset purchase facility by a further GBP 25 billion beyond the level approved in March 2009, chancellor Alistair Darling agreed that the increase would 'provide the MPC with scope to vary the stance of monetary policy to meet the inflation target'.
He also stated his belief that the markets for commercial paper and investment grade corporate bonds, purchased through the quantitative easing programme, had 'improved considerably since the start of the year'.