Bank of England (BOE) has announced that it will inject another £75bn into the economy through QE (Quantitative Easing) programme. It is significant to note here that BOE had already infused £200bn in the economy by buying government bonds. This had been done with the expectation that the huge infusion of money (£200bn) would boost commercial bank lending. However, the economy has witnessed a fragile recovery, even after the infusion of £200bn.

It is significant to mention here that QE programme was last adopted by the central bank in the year 2009. The recent Quantitative Easing programme announced by Bank of England has been necessitated because of the fact that the conventional monetary policies are being found to be insufficient. The Committee took the decision of infusing £75bn into the economy through QE programme after going through some disturbing data and facts about the economy. Some of those disturbing facts and data are given below:

I. Interest rates held by the apex bank has been very low and currently it is at the record low of 0.5%. II. UK economy has seen sluggish growth during April – June of 2011. During this period it grew by a miniscule 0.1%.
III. The rising inflation is expected to play spoilsport in achieving the medium term target of 2%.

These facts have led the committee to decide upon the infusion of £75bn stimulus in the economy through QE programme so that the medium term target can be achieved. Mervin King, the Governor of the Bank of England, is upbeat about the announced QE programme and expects it to have positive effect on the economy.

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http://www.bbc.co.uk/news/business-15196078