THE TELEGRAPH: The Bank of England has slashed interest rates to the lowest level on record and pledged to pump up to £150bn of new money into the economy as it embarks on a radical new policy to fight recession.
The Bank's half a percentage point cut to 0.5pc was widely expected by economists and all attention was centered on the Bank's unprecedented plan to inject new money into the arteries of the ailing economy.
The sweeping move - known as quantitative easing and considered to be the "nuclear option" for central banks - was predicted, but the speed and scale of the initial investment came as a surprise. The Bank plans to fire £75bn of money into the economy over the next three months largely through the purchase of government bonds, known as gilts.
The Bank is embarking on policy to prevent the UK economy - already mired in the deepest recession since the 1980s - from tipping into something worse. Despite the massive recapitalisation of the crippled banking system, unemployment is rising and consumer confidence collapsing as the crisis spreads from financial markets into the broader economy.
"It's a leap in the dark," said George Osborne, the shadow chancellor.
"It's effectively printing money, but because all the other government policies haven't worked. I don't think the Bank of England was left with any other options." >>> By Angela Monaghan | Thursday, March 5, 2009
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