Bank expands QE by £50bn; Rates held

The Bank of England’s Monetary Policy Committee (MPC) has increased its quantitative easing programme by £50bn as it looks to shore up the UK’s ailing economy.

Its widely expected decision to pump more money into the economy takes the quantitative easing (QE) programme to £325bn. The last time the Bank extended QE was back in October, raising it from £200bn to £275bn.

Minutes from last month's MPC meeting revealed growing consensus for a new round of QE.

Meanwhile, the Bank has opted to hold interest rates for the 35th consecutive month at 0.5%, where they have remained since March 2009.

Its decision to extend the asset purchase programme comes as the UK hangs on the verge of recession after the economy contracted by 0.2% in the last quarter of 2011.

The ongoing eurozone debt crisis has also contributed to an uncertain outlook.

But against this, recent upbeat data from the manufacturing, construction and service sectors have hinted at a recovery. The likely prospect of a new EU/IMF bailout for Greece, meanwhile, has also helped steady markets.

The latest injection of monetary stimulus also comes amid a backdrop of falling inflation, with the CPI index easing from 4.8% in November to 4.2% in December. Next week's figures are expected to show a further drop in inflation.