Bank of England announces it will pump an extra 拢50bn into the economy through quantitative easing
The Bank of England has kept interest rates on hold at 0.5%, the lowest-ever rate, for the second consecutive month.
Meanwhile the bank announced that it would pump an extra 拢50bn into the economy through 鈥渜uantitative easing鈥� whereby it creates digital credit to buy government and corporate bonds. It will have spent 拢75bn by June and will now extend this to 拢125bn.
Head of residential development and investment at Jones Lang LaSalle, James Thomas, said he hoped some of the money would find its way to mortgages. He said: 鈥淭here is some evidence of this as inter-bank lending has shown some signs of improvement. The spread between the base rate and three-month Libor has fallen considerably to the lowest level since September. Mortgage approvals have increased since the start of the year to 39,000 in March from 32,000 in January.
But Brigid O鈥橪eary, senior economist at the Royal Institution of Chartered Surveyors (RICS), disagreed, saying: 鈥淪o far there has not been much evidence that quantitative easing has boosted bank lending significantly.
鈥淩ICS hopes that that increasing the size of the asset purchasing scheme will 鈥� improve availability of mortgages finance.鈥�
According to the Bank鈥檚 Monetary Policy Committee (MPC) minutes, all nine members voted to hold the base rate in April.
Today鈥檚 decisions came shortly before the European Central Bank decided to cut its own interest rate from 1.25% to 1%.
