Bank discussing economic rescue bid

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The Bank's Monetary Policy Committee (MPC) will also vote at the two-day meeting to cut interest rates to another new record low of 0.5%, experts believe.

But the sixth successive month of falling rates is likely to be overshadowed by a formal vote to begin "quantitative easing" (QE) tactics - effectively printing money - to drag the UK out of recession.

The MPC is expected to press on with the strategy as soon as possible after Chancellor Alistair Darling gives the go-ahead and, according to reports this week, the Bank could create about £150 billion.

Despite interest rates being at all-time lows, anxious banks are still reluctant to lend, so the Bank of England is resorting to increasing the money supply.

Investec chief economist Philip Shaw said the move "should in principle encourage the banks to lend to private sector agents such as households and businesses, stoking monetary growth and stimulating activity".

The Bank will create the money to buy Government and corporate bonds through its Asset Purchase Facility (APF).

The APF has bought up £820 million in corporate bonds - like company IOUs - in a bid to ease conditions in credit markets.

Whether the tactic will work, however, depends on the extent to which struggling banks pass on the extra funds created by the Bank of England.

"We suspect that in the UK there will be a considerable degree of reserve hoarding," Mr Shaw added.