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European central banks to blast cash into economy

With Europe sliding toward recession, the region’s two main central banks are preparing to redouble their emergency measures aimed at softening the downturn and blunting the effects of the government debt crisis.

business Updated: Feb 08, 2012 22:21 IST

With Europe sliding toward recession, the region’s two main central banks are preparing to redouble their emergency measures aimed at softening the downturn and blunting the effects of the government debt crisis.

Analysts expect the UK’s central bank, the Bank of England, to announce Thursday that it will inject another £50 billion ($79 billion) of new money into the economy.

Meeting the same day at its headquarters in Frankfurt, Germany, the European Central Bank is expected to trumpet the advantages of its second unlimited offering of cheap, three-year loans to be allotted to banks on February 29.

Neither central bank is expected to change interest rates from their current record lows — the Bank of England at 0.5% and the ECB at 1.0%. Rather, attention will focus on their outlooks and their attempts to push more money into the banking systems and the economy.

The euro zone economy is widely expected to have contracted in the fourth quarter, while the UK shrank 0.2% in the last three months of the year.