Bank of England, Britain's central bank, decided on Thursday to maintain the short-term interest rate at 0.5 percent but to increases the size of Asset Purchase Program by 25 billion pounds (41.29 billion U.S. dollars) to 200 billion pound (330.37 billion U.S. dollars) in a bid to spur the economy.
In a statement released after a monetary-policy meeting, Bank of England's Monetary Policy Committee said that the committee voted to maintain the official Bank Rate at 0.5 percent. The Committee also voted to continue with its program of asset purchases financed by the issuance of central bank reserves and to increase its size by 25 billion pounds (41.29 billion U.S. dollars) to 200 billion pounds (330.37 billion U.S. dollars).
The UK central bank said that the world economy has shown signs of recovery, with a number of emerging market economies experiencing a strong rebound in growth, although global activity as a whole remains significantly depressed.
It also said that UK output has fallen by almost 6 percent since the start of 2008. And households have reduced their spending substantially and business investment has fallen especially sharply.
It said that the bank agreed that it should extend its program of purchases of government and corporate debt to a total of 200 billion pounds (330.37 billion U.S. dollars), financed by the issuance of central bank reserves. The Committee expects the announced program to take three months to complete and the scale of the program will be kept under review.
The British economy declined by 0.4 percent in the third quarter of this year, the sixth consecutive drop. That's why the Bank of England decided to enlarge the direct money supply program in a bid to push the economy out of recession as soon as possible. /.