Monetary Policy Committee member, Alan Taylor, says inflation is “normalising” as the economy slows and jobs market outlook turns negative.
26th Feb 20260 5,023 1 minute read Simon Cairnes
A Bank of England rate-setter believes there could be three rate cuts this year, as easing inflation and a softer labour market have shifted the outlook for interest rates.
Alan Taylor (pictured), an external member of the Monetary Policy Committee (MPC), made the comments while speaking to bankers and City analysts, ahead of a Treasury hearing where Governor Andrew Bailey and the committee members will be questioned on the pace of future reductions.
I have become more reassured that we are proceeding towards inflation normalisation.”
Taylor told City A.M. that the jobs market was “converging on a pessimistic outlook”, adding, “I have become more reassured that we are proceeding towards inflation normalisation at a reasonable pace. We might have two or three rate cuts to go before the theoretical neutral level.”
He also suggested it was possible that inflation might even undershoot the Bank’s two per cent target. Official figures last week showed CPI inflation easing to 3% in January from 3.4% in December, driven by lower petrol prices and cheaper food and airfares.
Services inflationTaylor said services inflation remained an area that policymakers were watching closely because of its link to wages and domestic demand. He also pointed to external risks, telling the audience the US had moved into a “high tariff regime”, adding: “We should expect this shock to play out over many years.”
Taylor has been one of the more dovish voices on the MPC over the past 18 months, often backing larger rate cuts than colleagues, but if his prediction proves correct, the base rate could come down to 3.0% by the end of the year.
Tagsbank base rate 26th Feb 20260 5,023 1 minute read Simon Cairnes Share Facebook X LinkedIn Share via Email