Bank of England increases size of Asset Purchase Programme

The Bank of England voted to maintain the base rate at 0.5 per cent during February, but agreed to increase the size of its Asset Purchase Programme to £325 billion.
Its monetary policy committee voted at their monthly meeting, choosing to purchase a further £50 billion of assets, mostly gilts, in order to further boost the economy.

This latest round of quantitative easing was encouraged by a slowdown in the underlying pace of recovery during 2011, with activity falling during the final three months of the year.

With the state of the eurozone also negatively affecting Britain's export trade and projections suggesting weak near-term growth, the committee concluded that downward pressure would see inflation undershooting its two per cent target in the near future without further stimulus.

The Asset Purchase Programme is financed by the issuance of central bank reserves. A first round of quantitative easing began with the purchase of £200 billion worth of assets between March 2009 and January 2010.

In October 2011, the MPC agreed to further purchases totaling £75 billion.

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