Belfast Telegraph

Monday 28 July 2014

Vote set to take place on injecting new money into economy

Interest rates are likely to be slashed again this week as the Bank of England embarks on a bid to revive the economy with newly-created money.

Economists expect borrowing costs will hit a new record low of 0.5% on Thursday as rates fall for the sixth month in a row.

But a formal vote to begin so-called “Quantitative Easing” — effectively printing money — to drag the UK out of recession is also likely following the Monetary Policy Committee’s (MPC) two-day meeting.

The MPC is expected to press on with the strategy as soon as possible when Mr Darling gives the go-ahead.

While interest rates are at all-time lows, anxious banks are still reluctant to lend, so the Bank of England is resorting to increasing the money supply.

Vicky Redwood, of Capital Economics, said: “The interest rate decision is something of a sideshow this month, given that it looks set to be the first time in the MPC’s history that it takes a vote on more unconventional policy measures.”

The Bank will create the money to buy Government and corporate bonds through its Asset Purchase Facility.

The APF has bought up £820 million in corporate bonds — like company IOUs — in a bid to ease conditions in credit markets, but has so far been funded by £50 billion from the Treasury.

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk

Latest News

Latest Sport

Latest Showbiz