Extra £50bn pumped into UK economy The Bank of England has turned the printing presses back on after a majority of the members of its interest-rate setting committee voted to pump another £50bn into the stalled economy. Interest rates were held steady at 0.5 per cent. The decision, which was widely expected by the markets, reflects the BoE's growing concern about the chilling effects of the eurozone crisis on an economy that is already in a shallow double-dip recession. It also comes as the European Central Bank and the People's Bank of China cut interest rates in response to the global slowdown. "Against the background of continuing tight credit conditions and fiscal consolidation, the increased drag from the heightened tensions within the euro area meant that, without additional monetary stimulus, it was more likely than not that inflation would undershoot the target in the medium term," the MPC said in a statement. The monetary policy committee has torn up its growth and inflation forecasts of just a few months ago in reaction to signs that the UK economy was weaker than it thought. This, along with falling commodity prices, has pulled inflation from a peak of 5.2 per cent last September to 2.8 per cent in May. Philip Rush, an economist at Nomura, said: "By merely matching market expectations the MPC has failed to deliver the "shock and awe" it normally aims for when easing policy. Nonetheless, it has ensured that the programme contains sufficient ammunition to continue its aggressive campaign until it can be reviewed as part of the forecast round for the November Inflation Report. On growth, the MPC statement said export growth had slowed, and business indicators pointed to continued weakness at home and abroad. "In spite of the progress made at the latest European Council, concerns remain about the indebtedness and competitiveness of several euro-area economies, and that is weighing on confidence here," it said. On inflation, the MPC statement noted commodity prices had fallen and pay growth remained muted. Given the continuing drag from economic slack, that should ensure inflation continues to ease into the medium term. Since the financial crisis hit in 2008, the Bank of England has bought £325bn worth of assets in two bursts, mostly government bonds, with newly created electronic money in a process known as quantitative easing. Thursday's announcement will bring the total to £375bn. The purchases will be spread over four months. The BoE has also announced several measures in the past month to try to lower banks" funding costs and unblock the flow of credit to the real economy, including a "Funding for Lending" programme which has yet to begin. In a more positive note, the MPC statement said the committee agreed that the Funding for Lending scheme and moves to ease liquidity constraints on banks were welcome. "Taken together with reduced pressure on household real incomes, on the back of lower commodity prices, and the continued stimulus from past monetary policy actions, that should sustain a gradual strengthening of output growth," the statement said. James Knightley, an economist at ING, said: "We continue to have doubts over how successful extra QE will be, but seeing as the BoE has few other options we expect them to stick with it. Further steps to resolve the sovereign debt crisis in the eurozone would be far more beneficial.