How to Trade Bank of England's 50 Billion Pound Injection

The Bank of England announced on Thursday its decision to inject another 50 billion pounds into the British economy, in an effort to support the United Kingdom's economic recovery. The Bank of England's Monetary Policy Committee voted to increase the size of its of asset purchase program by 50 billion pounds to a total of 325 billion pounds, while maintaining the official Bank Rate at 0.5%. The Bank of England's decision to add 50 billion pounds to the economy was widely expecting, with some economists forecasting figures as high as 75 billion pounds. The Monetary Policy Committee based its decision to increase the asset purchase program on a slowing economic recovery that saw economic activity fall slightly during the 4th quarter of 2011. Although some recent surveys have indicated an improving economic outlook, the Bank of England was concerned over the slow economic growth in the United Kingdom's main export markets, as well as the high debt levels in a number of eurozone countries. The Bank of England also expressed concern over what it sees as a failure of some eurozone countries to improve their economic competitiveness. These factors all played a part in the Bank of England's decision to pump more money into the economy, which it expects to do over a three month period. The decision to leave interest rates at 0.5% was justified by declining inflation, which has fallen since peaking in September. Inflation is widely expected to continue to drop because a value added tax increase from January of last year will no longer affect 12-month comparisons. Regarding its decision to inject more money into the economy and maintain the historically low Bank Rate, the Bank of England said that "In the light of its most recent economic projections, the Committee judged that the weak near-term growth outlook and associated downward pressure from economic slack meant that, without further monetary stimulus, it was more likely than not that inflation would undershoot the 2% target in the medium term." Although the move to inject 50 billion more pounds into the United Kingdom's economy was widely expected, it shows that the Bank of England will be proactive in its efforts to give a boost to the economy. It could also help maintain political stability by supporting Prime Minister David Cameron's efforts to promote economic growth.