Rates hit 0.5%

The Bank of England’s Monetary Policy Committee cut the central bank’s base interest rate from 1% to 0.5%.

The 50 basis points reduction was largely anticipated by the market as the bank’s policy continues to respond to Britain’s weakening economy.

The bank also announced plans to inject £75 billion into the economy through the purchase of assets such as gilts and corporate bonds. The move signals the beginning of a policy of quantitative easing, whereby the central bank increases money supply to aid the flagging economy.

Alistair Darling, the chancellor of the exchequer, gave his permission for the Bank to spend as much as £150 billion on the assets.

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