Bank of England Announces 75 Billion Pound Bailout

October 07 00:00 2011

New York, October 7 ( -The Bank Of England (BoE) has surprised the markets by making an early  move and taking efforts to shield the British economy from what seems like an almost certain Greek default and the European crisis that it has the potential to bring about.  The dramatic fall of the sterling against the falling dollar may have given the market some hints that the Bank of England may be up to something. But a stimulus package of this magnitude was certainly not expected.

The Bank of England will use the newly created money to carry out an asset purchase program that is expected to pump money in the economy and stimulate growth. This is combined with the Bank of England decisions to continue to keep the interest rates dramatically low at 0.5%. This can be seen in contrast with the European central Bank which is maintaining the interest rate at 1.5% despite being at the center of the crisis.

Meanwhile, skeptics are concerned about the possibility of an unrestricted inflation that the bailout is expected to bring along with it. England is currently reeling with inflation at a high of 5% while wages not rising. The skeptics are worried that the bailout may solve the issues of the big banks and corporations but the common man may be hit more hard.