LONDON: The Bank of England on Thursday unveiled an extra £100 billion of cash stimulus to prop up Britain's coronavirus-hit economy, despite a slump less severe than first thought.
The BoE, reporting the outcome of a regular meeting, said policymakers voted to hike the central bank's quantitative easing (QE) stimulus by the equivalent of $126 billion or 112 billion euros.
The Monetary Policy Committee (MPC) panel also left the central bank's key interest rate at a record-low 0.1 percent. The pound held steady in response.
The QE expansion was widely forecast by analysts after the UK economy contracted by one fifth in April amid a nationwide lockdown imposed on March 23 to try and halt the spread of the coronavirus outbreak.
Yet policymakers believe that the economy will fare better than anticipated as lockdown restrictions are relaxed.
"UK GDP contracted by around 20 percent in April, following a six-percent fall in March," noted minutes from the MPC gathering.
"Evidence from more timely indicators suggests that GDP started to recover thereafter.
"Payments data are consistent with a recovery in consumer spending in May and June, and housing activity has started to pick up recently," the minutes added.
Yet policymakers conceded that "the labour market has weakened materially", while they expect an increasing number of workers to be furloughed -- or have wages backed up by the state -- in the second quarter.
The BoE's latest cash injection means that a total of £745 billion in QE is swirling around the UK economy to boost growth -- as a result of economic shocks consisting of the global financial crisis, Brexit uncertainty and the COVID-19 outbreak.
The BoE had already added £200 billion of QE stimulus in March and slashed borrowing costs to the current historic nadir in response to fallout from the virus.
Under QE, the central bank purchases assets such as government and corporate bonds to stimulate lending and economic activity.