Bank of England (BoE) Rate Cut: Printing money and zero interest rates

try and force banks to start lending money. The BoE is also expected to unveil plans to inject £150bn of new money onto the banking system. This does not mean that they will print more money; it just means that more money will be made available electronically

The Bank’s Monetary Policy Committee is almost certain to cut interest rates by half a point, taking the rate to an historic 0.5 per cent. The focus of the day is the Bank of England’s plans to inject more money directly into the economy, known as quantitative easing.

The cost of borrowing has come down dramatically over the past few months, and has little or no effect so desperate measure is now needed. Adding new money to the economy will hopefully help banks to start borrowing money to business, which should hopefully kick start the economy. The fear is that in 18 months time inflation will rise to around 6 per cent.

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