THE Bank of England is to extend its Quantitative Easing (QE) programme (printing money) by another £50bn over the next four months in a bid to boost the economy.
The latest increase decided by the Bank’s Monetary Policy committee (MPC) will take the total stimulus to £375bn.
The MPC has also decided to leave UK interest rates unchanged at a record low of 0.5 per cent.
Yesterday’s announcement was followed by that of the European Central Bank, which cut its interest rate to 0.75 per cent from one per cent.
The ECB rate-cut comes despite an inflation rate running above the two per cent target for the eurozone.
The Bank of England said that the slumping UK economy had ‘barely grown for a year and a half’.
It added that growth in export markets had also slowed and that the eurozone debt crisis was ‘weighing on confidence here’.
Justifying its move to print more money, the Bank said that there was a danger that inflation would fall below its target rate of two per cent without an increase in QE.
The government’s preferred Consumer Price Index currently stands at 2.8 per cent, down from 5.2 per cent in September last year.
The additional QE stimulus had been expected following last month’s MPC meeting, when four of the nine members voted to increase QE.
Meanwhile, Barclays bank credit rating has been cut by Moody’s and Standard and Poor’s (S&P).
The two rating agencies lowered their outlook on Barclays from stable to negative amid the bank rate-rigging scandal.
Moody’s said shareholder and political pressure was creating uncertainty about the bank’s future.
S&P said the emergence of ‘weak business practices’ had hit Barclays’ prospects.
Moody’s also warned that Barclays may find it difficult to replace chief executive Bob Diamond, chief operating officer Jerry del Missier, and chairman Marcus Agius, all of whom resigned this week.
The move came a day after the ex-Barclays chief executive told MPs the rate fixing was ‘reprehensible’.