The Bank of England has cut interest rates to a new all-time low of 0.5% and said it was now boosting the money supply to help revive the economy.

Interest rates have now been reduced six times since October, and the latest half a percentage point cut from January’s 1% had been expected.

The Bank said it would expand the amount of money in the system by £75bn in an attempt to boost bank lending. The idea is that if the amount of money in the system is boosted, commercial banks will find it easier to lend.

Quantitative easing is sometimes incorrectly referred to as printing money, but the Bank will not expand the supply of money by making new banknotes. Instead, it will buy assets - such as government securities (gilts) and corporate bonds. But as it will not borrow to fund the purchases, it is creating new money. Though this latest cut should help support business and consumer confidence, it it may not have a dramatic impact on the cost or availability of credit.