Bank of England faces risk of "deficient demand," Taylor says

OSLO, March 2(Reuters) - The Bank of England will soon find itself in a position where it will no longer face much of a trade-off between a slowing economy and inflationary pressures and there is a risk that demands falls too low, policymaker Alan Taylor said on Monday.

"I judge that we will soon find ourselves largely outside of trade-off territory – and even at risk of entering the familiar realm of deficient demand," Taylor said at a conference hosted by Norway's central bank in Oslo.

That was because "over 2025, and into 2026, broadly speaking, inflation has been weaker than expected in successive (BoE) forecasts, the unemployment rate higher, and wage growth lower," he said.

Taylor was part of a four-strong minority on the BoE's Monetary Policy Committee which sought to cut benchmark interest rates to 3.5% from 3.75% last month. He said at the time he saw a risk that inflation could persistently undershoot the BoE's 2% target in the future.