Yesterday, the Bank of England announced a £75 billion asset purchase program financed by the issuance of central bank reserves. The Bank of England also announced it has cut to 0.5% the interest rate it pays on bank reserves.

The Bank of England, operating in conjunction with the U.K. Treasury, decided on the asset purchase program in order to boost “the supply of money and credit and thus [raise] the rate of growth of nominal spending to a level consistent with meeting the inflation target in the medium term.” The Bank of England said it might take up to three months to carry out the program of purchases and that part of the “sum would finance the Bank of England’s program of private sector asset purchases through the Asset Purchase Facility, intended to improve the functioning of corporate credit markets.” However, in order to meet its objective the Bank of England will “also buy medium- and long-maturity conventional gilts in the secondary market. It is likely that the majority of the overall purchases by value over the next three months will be of gilts.” The Bank of England announced the details of its gilt purchases in a separate statement.