The Bank of England has voted to inject £50bn into the economy as the UK struggles to pull out of its double-dip recession and the eurozone debt crisis intensifies.
Tha bank increased the scale of its quantitative easing programme, to boost the money supply from £325bn to £375bn on Thursday, but kept interest rates on hold.
The boost comes amid signs that the economy deteriorated in June as industry surveys showed the construction sector went into reverse and the powerhouse services sector suffered its worst performance for eight months.
Most economists think gross domestic product - a broad measure for the total economy - fell slightly in the second quarter of 2012, following declines of 0.4% and 0.3% in the previous two quarters.
Howard Archer, Chief UK & European Economist at IHS Global Insight said the decision was no surprised.
"With latest economic data and surveys largely grim, the outlook worrying and recent inflation developments largely benign, it was always likely that most, if not all, MPC members would take the view that more QE is now warranted and justifiable," he said.
"Meanwhile, the Eurozone situation is still very worrying and a significant risk to the UK outlook, despite some positive developments at the EU leaders’ summit at the end of June and despite the prospects of a near-term Greek exit from the Eurozone being diluted by the result of the general election in mid-June."
Dr Neil Bentley, CBI deputy director-general, said: "This extension of QE should provide a fillip to confidence."