Breaking News: Base rate held and QE increased by £50bn

THE Bank of England kept the cost of borrowing steady at 0.5% today for the fifth successive month and increased its quantitative easing programme.

It said it would pump an additional £50bn into the economy through the scheme which is designed to stimulate the economy.

The Bank has so far earmarked £125bn which has been used to buy assets such as government securities and corporate bonds.

It was understood to be reluctant to increase debt if the economy is showing signs of recovery. The Office for National Statistics said industrial production rose 0.5% in June from May, although it is still down 11.1% from last year.

Today the Bank said household and business confidence had picked up and there are signs that output in the UK’s main export markets is stabilising. But it stressed that the world economy remained in recession and financial conditions remained fragile.

In a statement it said: “In the UK the recession appears to have been deeper than previously thought… In the light of that outlook, the committee also agreed that it should extend its programme of purchases of government and corporate debt to a total of £175bn, financed by the issuance of central bank reserves.

“The committee expects the announced programme to take another three months to complete. The scale of the programme will be kept under review.”

Sonya Kapur, investment analyst at BNP Paribas Real Estate, said: “This is good news as the growth in the money supply has been growing at a snail’s pace.

“But there has been little evidence so far that quantitative easing is helping the economy to recover.”