INFLATION FEARS HALT CASH BOOST FOR FRAGILE ECONOMY

The Bank of England has pumped £200billion of newly created money into the economy to shore it up.

But yesterday it announced its asset-buying programme, known as quantitative easing, would not be extended although it did not rule out further spending in the future.

Experts said the move had been caused by a record rise in the Consumer Prices Index. The inflation measure was 2.9 per cent in December. The Bank’s target is 2 per cent.

There were concerns among the Bank’s Monetary Policy Committee that quantitative easing would only make inflation worse.

Jason Simpson, of Royal Bank of Scotland said: “Inflation is considerably stronger than the Bank had expected and there are concerns that it won’t get back within target if quantitative easing continued.”

News of the programme’s suspension came on the same day the MPC left interest rates at 0.5 per cent for the eleventh month in a row.

Low interest rates are credited with fuelling a rise in property values.

Yesterday Britain’s biggest mortgage lender, the Halifax, said the cost of a typical three-bedroom semi was £169,777 – £15,287 higher than it was last April.

The sharp turnaround in the housing market means prices rose 9.9 per cent in the year to January.