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UK Drops Rates to 0.5%, Begins 'Printing Money'

Quantitative easing begins with $108B of new money

By Jason Farago,  Newser Staff

Posted Mar 5, 2009 6:18 AM CST
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(Newser) – The Bank of England cut interest rates today by 50 basis points to an all-time low of 0.5% and began a far more drastic process: quantitative easing, or "printing money." The Times of London reports that the Bank received permission from the government this morning to spend $106 billion of newly created money buying up government and corporate debt. The UK's central bank recently revised down already glum growth forecasts, and many economists expect no growth this year.

Alistair Darling, the British chancellor, gave permission to the Bank of England to 'print' money in a letter today to the Bank of England.
Alistair Darling, the British chancellor, gave permission to the Bank of England to 'print' money in a letter today to the Bank of England.   (AP Photo/Lefteris Pitarakis)
The Bank of England cut rates to 0.5% and began the process of quantitative easing, also known as 'printing money.'
The Bank of England cut rates to 0.5% and began the process of quantitative easing, also known as 'printing money.'   (©austinevan)
The Bank of England cut rates to 0.5% and began the process of quantitative easing, also known as 'printing money.'
The Bank of England cut rates to 0.5% and began the process of quantitative easing, also known as 'printing money.'   (©MuLaN%u2122)
The Bank of England cut official interest rates to a record low of 0.5 percent, the sixth consecutive month that the central bank has lowered interest rates.
The Bank of England cut official interest rates to a record low of 0.5 percent, the sixth consecutive month that the central bank has lowered interest rates.   (AP Photo/Sang Tan)
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COMMENTS
Showing 1 of 1 comment
Snowleopard
Mar 5, 2009 2:30 AM CST
How about instead of buying debt with it, you start injecting the money into the economy from the bottom up, so home owners can start paying off their mortgage. To just buy up all this bad debt it plain dumb, because unless you address people's ability to pay their loans, there's just going to be more defaults and bad debt created later on.

How does quantitative easing work?
Financial Times (UK)

 
United Kingdom • central bank • Bank of England • Alistair Darling • interest rate cut • quantitative easing

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