(Bloomberg) -- The prospect of negative interest rates from the Bank of England is looming back into view, with Morgan Stanley expecting moves in that direction this year.

Policy makers could start sending signals on cuts in August, before taking the base rate to zero in November and eventually cutting even further, according to the bank’s analysis.

The BOE could even reduce rates as far as minus 50 basis points in the first half of 2021 according to Jacob Nell, a London-based economist at the bank, although he only puts the chances of that at 20%, “if we have a hard Brexit or bad Covid,” according to emailed comments.

Such action would come in two stages during February and May 2021, Morgan Stanley’s analysis said. That puts it ahead of the money markets, where investors bet that rates will only have fallen to near zero by summer 2021.

Talk of further easing and negative rates is heating up again among London’s traders and analysts, as policy makers around the world seek to limit the economic impact of coronavirus. HSBC Holdings Plc lowered its forecast for gilt yields this year to zero, and sees an increased possibility of negative rates.

Dovish signals from an array of policy makers raised the chances of such action, in the context of a recession of historic proportions and the base rate already at a record low of 0.1%.

While expectations cooled somewhat after BOE Executive Director for Markets Andrew Hauser said that negative rates were not going to happen in the near term, they have since returned. That’s because some market watchers say quantitative easing alone won’t be enough to help the economy out of a historic recession, especially given concerns over a chaotic Brexit at year-end and a second wave of Covid 19.

Money Markets Take Bets on Negative U.K. Rates Off the Table

Morgan Stanley also expects the BOE to top up its asset-purchase facility with 100 billion pounds ($127 billion) in gilt buying at its meeting next week.

“If there is a second wave this autumn I have little doubt rates could sink to or below zero,” said Kenneth Broux, a strategist at Societe Generale SA in London. “Medical experts seem to be quite convinced that it will happen after the summer.”

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