Could Interest Rates Drop to 0.25% or More QE?

It has been reported this wekend that the markets are pricing in a 30% chance that interest rates could drop to 0.25% by February 2012.  Allied to this, the markets also believe that interest rates will not rise to 0.75% until 2013.

If the BoE does not reduce rates, many are predicting that a further round of Quantative Easing will be necessary to bolster growth in the UK economy.  UK Economist at Deutsche Bank, George Buckley said: "A cut in interest rates is highly unlikely, but technically possible.  The market is more likely to be suggesting that rates will stay flat for a very long time.  It could also be suggesting that more QE is expected."