The Bank of England has reduced its interest rate by 0.5% points to 0.5%, the lowest since the bank was founded in 1694. The bank also announced a programme to purchase £75 bn (EUR 84.5 bn) of assets aimed at boosting the supply of money and credit.
The Bank of England has reduced its interest rate by 0.5% points to 0.5%, the lowest since the bank was founded in 1694. The bank also announced a programme to purchase £75 bn (EUR 84.5 bn) of assets aimed at boosting the supply of money and credit.
'World activity continued to weaken, reflecting both depressed confidence and the persistent problems in international credit markets,' the bank said in a statement on Thursday. 'In the UK, output dropped sharply in the fourth quarter of 2008. Business surveys continue to point to a similar rate of contraction in the early part of this year. Credit conditions faced by companies and households remain tight.'
The Bank said it might take up to three months to carry out this programme of purchases. Part of that sum would finance the Bank of England's programme of private sector asset purchases through the Asset Purchase Facility, intended to improve the functioning of corporate credit markets, but the Bank would also buy medium- and long-maturity conventional gilts in the secondary market.
