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Link to the full article: Economist

Mar 5th 2009
From The Economist print edition
The Bank of England acts to boost the money supply

JUST as the supposedly improbable keeps on happening to banks in the financial crisis, so Britain’s economic managers are finding themselves adopting policies they never dreamed would be necessary. The savage downturn induced by the credit crunch has brought the Treasury centre stage, as it throws billions at banks and revives the lost art of active fiscal policy. The Bank of England, for its part, is breaking ever more unconventional ground.

On March 5th the central bank advanced to the frontier of orthodox monetary policy, lowering once again the interest rate it pays on the balances that commercial banks hold with it as liquid reserves. The half-point reduction brought the base rate down to 0.5%, probably the final stage in an extraordinarily swift downhill journey from 5% in early October.

Not content with that, the Bank of England crossed the frontier by announcing the start of “quantitative easing”.