BoE's Taylor says better to cut rates now than risk waiting

July 4 (Reuters) - Bank of England policymaker Alan Taylor said on Friday that he thought it would be better to cut interest rates now rather than wait and risk needing to cut them in a hurry.

Taylor said he expected Bank Rate to fall to "around 3%" by the end of next year if the BoE's inflation projections published in May unfolded more or less as predicted.

"(For) me a better risk management approach at this point is to cut and hold for longer later, rather than hold too much, and have to cut in a hurry later," Taylor said in the text of a speech due to be delivered to the London School of Economics.

Taylor repeated comments made earlier this week that downside risks are brewing for Britain's economy and that a soft landing was at risk.

"In the near term I see stronger disinflationary forces building up over the rest of this year, and then in the medium term I see a need to reach for a lower neutral level (of interest rates) over the course of 2026 and 2027 should we be able to normalize smoothly," Taylor said.

He estimated the neutral level of interest rate - at which they no longer stimulate the economy or inflation - at between 2.25% and 3.25%.

"Should we close in to a state of the world where all shocks have mostly dissipated, I would expect Bank Rate to normalise at close to the central estimate of 2.75%," Taylor said.

"That means with Bank Rate currently at 4.25% we still have a long way to go to get to neutral," Taylor said.