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Economy to receive £50bn boost.
With little room for rate cuts the Bank has been pumping money into the banking system through quantitative easing.
The process involves the Bank effectively printing money to buy government and corporate bonds.
It has spent about £52bn so far and is on track to spend £75bn by June. It will now extend its spending to £125bn.
According to the BBC's economics editor Stephanie Flanders, the Bank's decision indicated there is a lot more still to be done to stimulate bank lending and the economy.
But the evidence to date on whether the policy has been helping the financial system has been mixed, she said.
The Bank's own statements on the current state of the economy were equally so.
It acknowledged that "the world economy remains in deep recession", but added that, "surveys at home and abroad show promising signs that the pace of decline has begun to moderate".
'Going to plan'
Some City economists said it may be a hopeful sign that the Bank's programme of quantitative easing has only been extended to £125bn, given that the Treasury has said the Bank can spend up to £150bn.
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