Bank says QE cut rates by 1 per cent

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Research published by the Bank of England suggests the Bank's policy of quantitative easing – the direct injection of money into the economy – reduced interest rates by about 1 percentage point.

The research paper found that "gilt yields are about 100 basis points lower than they would otherwise have been". The Bank started what became a £200bn programme of purchases of assets, mostly gilts, in March last year as it found it could not practically cut the Bank rate below the record low of 0.5 per cent.

The cost of companies raising debt via bonds was around 70 basis points lower. The effect on shares and sterling was harder to assess.