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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.
