Bank of England External member of the Monetary Policy Committee Alan Taylor spoke on inflation dynamics and the economic outlook at Leeds University on Wednesday.
Taylor called for more rate hikes, and suggested a need for urgency. Taylor noted that inflation risks seemed to be subsiding, but the likelihood of a downturn in Britain’s economy had grown. While he did not consider this the most probable outcome, he believed it was still justified to lower interest rates in response:
- “Right now, I think it makes sense to cut rates pre-emptively to take out a little insurance against this change in the balance of risks, given that our policy rate is still far above neutral and would still remain very restrictive,”
More:
- “We are in the last half mile on inflation, but with the economy weakening, it’s time to get interest rates back toward normal to sustain a soft landing”
- “It is this logic that convinced me to vote for an interest rate cut in December.”
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The BoE has cut its benchmark Bank Rate twice since August. The Monetary Policy Committee next meet in February: