October 30, 2020

Bank of England offers more stimulus to UK economy

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LONDON (AP) — The Bank of England surprised markets Thursday by sanctioning another 75 billion pounds ($116 billion) injection into a British economy that’s suffering from the shockwaves of Europe’s debt crisis and the British government’s austerity program.

The Bank’s rate-setting Monetary Policy Committee said it was reviving a program of asset purchases which injected 200 billion pounds in between March 2009 and January 2010 to help lift Britain out of a deep recession. The hope is that by buying government bonds from banks, they will use their cash injection to lend to hard-pressed businesses and households.

The scale of the asset purchases, which will take four months to complete, was more than anticipated by those predicting Thursday’s move. Most economists thought the Bank would opt to wait until November before deciding on a more moderate 50 billion pound injection.

“It is clearly an indication of the extent to which the MPC is worried about the slowdown that it has chosen to act so soon and so decisively,” said Peter Dixon, economist at Commerzbank.

In a statement, the nine members of the MPC said the pace of global expansion has slackened, especially in Britain’s main export markets — a reference to the eurozone, which is mired in a debt crisis that’s beginning to impact on banks’ day-to-day activities.

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