Bank of England prints more money

06/11/2009

Economic experts have expressed concern over the Bank of England's decision to print more money to help the UK recover from recession.

Policymakers announced yesterday that interest rates would be held at their all-time low of 0.5 per cent and that the quantitative easing scheme would be expanded from £175 billion to £200 billion.

The programme sees the bank buy up government and corporate debt - thereby increasing the amount of cash flowing around the economy.

It is hoped that this radical scheme will improve conditions for borrowers, with mortgage and loan availability for consumers increasing.

However, some economists have expressed concern that quantitative easing will result in steep rises in inflation rates in future.

This would result in price increases for goods and services in the future - causing housing debt and bills to become more costly.

Commenting on the Bank of England decision, Duncan Higgins, senior analyst at Caxton FX said: "In extending their asset purchase scheme and thereby loosening their monetary policy further, the [Bank] has confirmed that an upward interest rate movement is still a long way off."

Robert Sinclair, director of the Association of Mortgage Intermediaries, said: "With the expectations that inflation will rise in the short term, the Bank still increased the quantitative easing programme, indicating that they remain concerned that the recovery [in the economy] is still struggling to gain traction."

Tags; Current UK Economy, Young Family Finances, Retirement Money Problems, Credit Card Lifestyle, Recent Graduate Debt,

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