The Bank of England is set to hold British interest rates steady tomorrow as it assesses the impact of a radical plan to pump new cash into the recession-blighted economy.
The British central bank launched last month a twin-pronged attack on the global credit crunch by creating £75 billion sterling of new money and slashing borrowing costs to a historic low of 0.5%.
The Bank of England's new policy of quantitative easing is a final attempt to increase money supply, as lower interest rates fail to breathe new life into the economy.
Britain was dragged into deep recession in the second half of 2008 by an international economic crisis that has shattered investor sentiment, rocked world financial markets and battered major economies across the globe.
In reaction, the Bank has slashed its key lending rate in a series of sharp cuts since October as it seeks to lift the economy out of the doldrums. Last week the European Central Bank cut its key rate by a quarter of a percentage point to a fresh record low of 1.25% amid a deepening euro zone recession.
Britain sank into an official recession after the economy shrank by a sharper than expected 1.6% in the fourth quarter of last year, the worst slide since 1980, recent official data showed.
The economy had already contracted by 0.7% in the third quarter. The widely-used technical definition of a recession is two quarters of contraction in a row.
