BoE's Taylor: Disinflationary forces are building

Bank of England (BoE) rate-setter Alan Taylor noted late on Friday that downside pressures are continuing to build up underneath the UK's economy, signaling that early rate cuts may be needed ahead of a questionable forecasting period.

Key highlights

Would expect bank rate to normalise close to 2.75%, absent shocks.

Would expect bank rate, should MPR inflation projections be close to what we actually see, at around 3% by end of 2026.

Better to cut rate now and hold for longer later rather than hold too long and cut in a hurry.

Disinflationary forces are building this year.

Insurance against deteriorating demand is advisable.

A soft landing for the UK economy is at risk.