Bank of England pumps another £100BILLION into UK economy: Cash-printing measures now hit £745billion in bid to stave off coronavirus economic meltdown
- The Bank of England believes the UK could face its worst recession in 300 years
- The UK economy has been significantly impacted during the coronavirus crisis
- Statistics reveal UK inflation fell to a four-year low of 0.5 per cent last month
- Unemployment rates are soaring and GDP shrunk by 20.4 per cent in April
- Here’s how to help people impacted by Covid-19
The Bank of England is expanding its cash-printing scheme by another £100billion amid mounting fears over economic meltdown.
Governor Andrew Bailey unleashed another round of quantitative easing, taking the total size to £745billion.
The widely-expected move comes after inflation figures gave the Bank more wriggle-room to act to pro up UK plc, which is facing the worst recession in 300 years.
But the Bank’s monetary policy committee kept interest rates at the record low of 0.1 per cent.
Economic experts believe the Bank of England’s money-printing programme could reach £1trillion during the coronavirus pandemic
This involves pumping money into the financial system by buying up assets such as Government bonds – or gilts.
As the Office for National Statistics yesterday announced inflation fell to a four-year low of 0.5 per cent last month – down from 0.8 per cent in April – experts said more QE was on the cards.
Paul Dales, chief UK economist at Capital Economics, said: ‘May’s further fall in inflation is probably only the beginnings of a prolonged period of very soft price pressure that we think will prompt the Bank of England to announce a total of £350 billion more QE, starting with £100 billion – or maybe even £150 billion – at today’s policy meeting.
‘This would push up the total amount of QE since the last financial crisis to almost £1 trillion.
‘By pumping more money into the system this will boost demand and businesses can put their prices up.’
Economists do not believe the Bank will take the drastic step of introducing negative interest rates.
The Bank has warned that the UK faces its worst recession in 300 year but also believes it can bounce back, with Governor Andrew Bailey (pictured) set to introduce another round of quantitative easing today to relieve the economy of financial worries
This involves charging banks to deposit money at the Bank of England, to encourage them to lend money to businesses and households.
After initially appearing to rule out negative interest rates, Mr Bailey has said the policy was under ‘active review’ during the current crisis.
The Bank has warned that Britain is facing its worst recession in almost 300 years, although it has also insisted that the economy could recover and bounce back strongly next year.
Official figures have shown the economy shrank by a record 20.4 per cent in April – the first full month of the lockdown.
And data released by the Office for National Statistics hinted at soaring unemployment, with 612,000 workers falling off payrolls between March and May.