The Bank of England will pump an extra £100bn into the UK economy to help fight the “unprecedented” Coronavirus-induced downturn by increasing the size of its bond-buying programme – known as quantitative easing.
However, they said there was growing evidence that the hit to the economy would be “less severe” than initially feared.
The Bank’s Monetary Policy Committee (MPC) also kept interest rates at a record low of 0.1%.
Suren Thiru, Head of Economics of the British Chambers of Commerce (BCC), said: “The Bank of England’s decision to significantly expand quantitative easing reflects the unprecedented impact of Coronavirus on the UK economy. It is vital that the Bank works with financial institutions to ensure that it translates into on the ground support for businesses.
“With economic conditions likely to remain challenging in the near term, further easing remains likely. However, with interest rates already at an historical low, extra loosening of monetary policy is unlikely to provide a significant boost to the economy. The central bank has rightly decided against moving interest rates into the negative, which risks doing more harm than good.
“The focus instead should be on delivering a fiscal environment that limits economic scarring and helps kickstart a recovery. This should include taking steps to close the remaining gaps in Government support, including giving businesses with direct incentives to invest and hire, and stimulating consumer demand through a temporary, but significant cut in VAT.”