Bank of England announces it will pump an extra £50bn into the economy through quantitative easing

The Bank of England has kept interest rates on hold at 0.5%, the lowest-ever rate, for the second consecutive month.

Meanwhile the bank announced that it would pump an extra £50bn into the economy through “quantitative easing” whereby it creates digital credit to buy government and corporate bonds. It will have spent £75bn by June and will now extend this to £125bn.

Head of residential development and investment at Jones Lang LaSalle, James Thomas, said he hoped some of the money would find its way to mortgages. He said: “There is some evidence of this as inter-bank lending has shown some signs of improvement. The spread between the base rate and three-month Libor has fallen considerably to the lowest level since September. Mortgage approvals have increased since the start of the year to 39,000 in March from 32,000 in January.

But Brigid O’Leary, senior economist at the Royal Institution of Chartered Surveyors (RICS), disagreed, saying: “So far there has not been much evidence that quantitative easing has boosted bank lending significantly.

“RICS hopes that that increasing the size of the asset purchasing scheme will … improve availability of mortgages finance.”

According to the Bank’s Monetary Policy Committee (MPC) minutes, all nine members voted to hold the base rate in April.

Today’s decisions came shortly before the European Central Bank decided to cut its own interest rate from 1.25% to 1%.