msnbc.com news services
updated 3/5/2009 7:58:28 AM ET 2009-03-05T12:58:28

The European Central Bank cut its main interest rate by a half percentage point to 1.5 percent Thursday.

Earlier, the Bank of England cut its official interest rates by half a percentage point to 0.5 percent and announced plans to create new money to buy banks’ assets.

In a widely anticipated move, the U.K. central bank’s monthly rate decision on Thursday included plans to begin so-called quantitative easing — a technical term that describes the technique of expanding the supply of money in the economy.

The bank says it will purchase 75 billion pound ($106 billion) of assets over three months by issuing central bank reserves — effectively creating money. The figure was less than expected by many analysts.

Britain fell into recession last year for the first time in nearly two decades and economists have warned that the downturn could be prolonged.

More on  interest rates   |   stimulus

The Associated Press contributed to this report.

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