The Bank of England last announced an increase in its bond program in November 2009 and the purchases ended in early 2010.

Chancellor of the Exchequer George Osborne said in a statement that monetary policy has a "critical role in supporting the economy" as he authorized the central bank to increase QE.

Today's expansion shows policy makers are prioritizing the recovery over the threat from inflation, which was 4.5 percent in August, more than double the Bank of England's target. The central bank said today that the deterioration in the outlook makes it "more likely" that inflation will undershoot its 2 percent goal in the medium term.

Eoin Treacy's view The Bank of England has demonstrated a clear growth bias throughout the credit crisis and its re-emergence as the Eurozone's sovereign debt crisis. Inflationary measures have remained persistently above the Bank's target and the Pound has been sacrificed to improve the competitiveness of the nation's exporters. Today's announcement of additional bond purchases can be viewed as a liquidity injection and should be welcomed by the stock market.

Gilts, and Treasuries, don't tend to perform particularly well during periods of quantitative easing. In fact, they have tended to rally in advance of such moves. Yes, the Bank of England will be in the market for bonds but the Treasury will also be issuing more. For as long as this remains the case, there is likely to be a surplus which should force yields higher and prices lower. Prices are considerably higher today than in 2009. A sustained move below 128 would likely confirm a medium-term peak.