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Bank of England cuts interest rates to record low

People walk by part of the facade of The Bank of England in the City of London, Thursday, March 5, 2009. (AP)

The Bank of England has cut official interest rates by half a percentage point to a 0.5 per cent and announced plans to create new money to buy banks’ assets.

In a widely anticipated move, the central bank’s monthly rate decision on Thursday includes plans to begin so-called quantitative easing - a technique of expanding the supply of money in the economy.

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

The bank is battling to revive Britain’s economy.

The country fell into recession last year for the first time in nearly two decades and economists warn the downturn could be prolonged.