Bank of England's Taylor says rates set to fall further as inflation drops

LONDON, Jan 14 (Reuters) - 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.