The Bank of England has today announced plans to inject a further £50billion through its quantitative easing programme – a process used to help stimulate the economy by putting more money into circulation.
The new plans will increase total spendings to £175billion, exceeding the £150billion limit first set by the chancellor.
The rate setters said in a statement that the recession "appears to have been deeper than previously thought".
They also made the decision to freeze interest rates at 0.5% for the fifth consecutive month, the lowest rate ever recorded.
A number of people in the markets were surprised by the Monetary Policy Committee's (MPC) decision to expand the programme.
The announcement had a negative effect on the pound, losing recent gains against the dollar to fall by over a cent to $1.6830.
Mervyn King, Bank of England governor, was obliged to ask the chancellor for permission to extend the programme beyond its original £150billion limit, to which Alistair Darling accepted.
Stephen Timms, financial secretary to the Treasury, said he thought extending the programme was the right thing to do.
"I think it's a key element alongside all the other things we've done - the VAT cut; the decision to let companies under pressure put off taxes they owe through the Time to Pay arrangement; bringing forward, as we have done, investment planned for future years into the current year," he said.
"I think what we're seeing is all those measures in combination having the effect that we'd hoped they would have and a growing sense of optimism now that, as we said at the time of the Budget, the economy is likely to return to growth by the end of this year."
The extra money will be spent over the next three months, part of which is to be used to expand the range of government debt the bank is prepared to buy.
The European Central Bank has also decided to keep its interest rates at 1%.
UK Price Comparison website Which4U -
Compare Credit Cards, Savings Accounts,
Fixed Rate Bonds, Bank Accounts,
Individual Savings Accounts, Loans, Mortgages, Insurance, TV & Broadband and Gas/Electric bills to find the best UK deals
