£75 billion worth of asset purchases

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Not only have the Bank of England announced that the interest rate will be dropped from the already low level of just 1%, down to 0.5%, but also there will be a £75 billion worth of asset purchases. Add all of the above to the fact that the UK will be embarking on quantitative easing and hopefully the UK economy will start to stabilise!

£75 billion worth of asset purchases

The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 0.5 percentage points to 0.5%, and to undertake a programme of asset purchases of £75 billion financed by the issuance of central bank reserves.
World activity continued to weaken, reflecting both depressed confidence and the persistent problems in international credit markets. In the United Kingdom, output dropped sharply in the fourth quarter of 2008. That reflected lower consumer spending, a further fall in business investment and a rapid run-down in stocks, in part offset by stronger net exports as the past depreciation of sterling began to take effect. Business surveys continue to point to a similar rate of contraction in the early part of this year. Unemployment has risen markedly. Credit conditions faced by companies and households remain tight.