The Bank of England??s monetary policy committee voted to extend its so-called quantitative easing programme of buying government and corporate bonds from £125bn to an unexpectedly large £175bn, while holding interest rates at 0.5 per cent.
The decision came despite an array of brighter economic data this week, with upbeat survey results suggesting that the economy was emerging from recession. But the central bank said the ??recession appears to have been deeper than previously thought? in the UK, although it noted that the pace of contraction had moderated.
The Bank of England??s quantitative easing programme, launched in March, involves buying government and corporate bonds in a bid to boost the volume of cash in the economy. It is designed to stimulate spending, support bank lending and help return the economy to growth.
The policy committee had opted not to increase the asset purchases at its two previous meetings, leading to speculation that the programme of cash injections had run its course.
Mervyn King, bank governor, said: ??Though there are signs that credit conditions may have started to ease, lending to business has fallen and spreads on bank loans remain elevated.?
