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5th Mar 2009
Economy to get £75bn cash injection as Bank of England cuts rates to 0.5%
Economy to get £75bn cash injection as Bank of England cuts rates to 0.5%
The Bank of England slashed interest rates to another record low of 0.5% today and launched an economic salvage bid with billions in newly-created money.
Official borrowing costs have fallen for the sixth month in a row, but the Bank will now tackle recession with so-called quantitative easing - effectively printing money - to ease credit conditions.
The Bank will create £75bn to pump into the economy over the next three months, in a radical move to stop recession turning into a deflation-fuelled depression.
The Bank's monetary policy committee had slashed rates from 5% in October to the historic low of 1% last month, and despite concerns over the efficacy of lowering rates further, the cut today had been expected.
But with its arsenal of rate cuts almost exhausted the Bank is hoping quantitative easing will stimulate spending and resuscitate the economy.
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