BOE lowers lending rate to 0.5 percent

The Bank of England said Thursday it would cut its key lending rate to 0.5 percent, the lowest in bank history.

The central bank also said it would begin quantitative easing of $105 billion, a program of pumping new money into the economy, generally through purchase of government bonds.

The bank said the February Inflation Report had implied a substantial risk of undershooting the 2 percent consumer price index inflation target in the medium term.

The bank’s statement also noted the lower lending rates provide smaller profit margins for the nation’s profit-oriented banks.

The Committee also noted that a very low level of Bank Rate could have counter-productive effects on the operation of some financial markets and on the lending capacity of the banking system.

However, the committee decided on balance to lower the rate, the statement said.