Bank of England pumps extra £25 bln into economy

LONDON (AFP) - The Bank of England announced on Thursday that it will pump another 25 billion pounds into the recession-hit economy, after it held interest rates at a record low.

"The BoE's Monetary Policy Committee today voted to maintain the official bank rate paid on commercial bank reserves at 0.50 percent," the central bank said in a statement.

"The committee also voted to continue with its programme of asset purchases financed by the issuance of central bank reserves and to increase its size by 25 billion pounds to 200 billion pounds," it added.

The asset purchase programme is more commonly referred to as quantitative easing. Under QE, the central bank buys bonds from commercial institutions to try and boost lending to businesses and individuals.

The BoE added Thursday that it would take three months to complete the additional asset purchases, while the scale of the programme would be kept under review.

The central bank also noted mounting signs of a tentative global economic recovery in a statement explaining its decision.

"The world economy has shown signs of recovery, with a number of emerging market economies experiencing a strong rebound in growth, although global activity as a whole remains significantly depressed," the BoE said.

"Asset prices have risen internationally since the spring, reflecting both the gradual improvement in the economic climate and accommodative monetary policies.

"And banks' funding conditions have improved, though financial conditions remain fragile."