Interest rates set by the Bank of England should continue to fall as inflation is likely to settle around the central bank’s 2% target soon, BoE policymaker Alan Taylor said on Wednesday.
“We can now see inflation at target in mid-2026, rather than having to wait until 2027 as in our previous projection,” Taylor said in the text of a speech he was due to give at the National University of Singapore.
“I see this as sustainable, given cooling wage growth, and I now therefore expect monetary policy to normalise at neutral sooner rather than later….Interest rates should continue on a downward path, that is if my outlook continues to match up with the data, as it has done over the past year.”
Taylor was part of a five-strong majority on the central bank’s Monetary Policy Committee that approved a cut in the BoE’s benchmark interest rate to 3.75% from 4% in December. The other four MPC members favoured no change to borrowing costs.
BoE Governor Andrew Bailey has said inflation – which stood at 3.2% in its most recent reading – could fall to around 2% in April or May this year. Investors are close to pricing two further quarter-point rate cuts by the BoE in 2026.
