Goldman Sachs - "Probably, but with a greater focus on ‘unconventional unconventional’ easing measures than on QE. Although we expect output growth to improve in 2013, we do not envisage a return to the economy’s long-run growth potential – around 21⁄2% per year, on our estimates – until 2016. And, given an output gap that is already large (on our estimates), we expect underlying inflationary pressures to be subdued. This combination of sluggish growth, significant spare capacity and weak inflationary pressures will be sufficient to justify further easing, in our view.
Exactly how the BoE would ease is less clear, however. The MPC has effectively ruled out any further reduction in Bank Rate from its current level of 0.5% and, as we have discussed in previous research, the BoE’s Gilt purchase programme has proved largely ineffective in reducing the cost and/or easing the availability of credit to the private sector.4 Thus, as a central case, we do not expect a change in Bank Rate or an additional increase in the BoE’s £375bn stock of Gilt purchases in 2013.
It is more likely, in our view, that any additional easing will focus on credit easing or other ‘unconventional unconventional’ measures."