Bank of England Official Advocates Rate Cuts as Inflation Falls

By Evans Momodu
1 minute read

The Bank of England’s interest rate-setting committee member, Professor Alan Taylor, has called for up to four interest rate cuts in 2025 following a surprise drop in inflation.

Speaking in Leeds, Professor Taylor emphasized the need for the Bank to act "pre-emptively" to address economic weakness, despite progress in controlling inflation.

He described the current moment as "the last half mile on inflation," suggesting it is time to lower rates to support a soft landing for the economy.

The latest data showed that inflation fell to 2.5% in December, defying economists’ expectations that it would remain at 2.6%. This marks a continued decline, bringing inflation closer to the Bank’s 2% target.

Economic Implications

Professor Taylor’s remarks highlight growing concerns about economic growth, suggesting a shift in focus from combating inflation to supporting broader economic stability. His stance aligns with his previous vote for a rate cut during the Bank’s December meeting.

For policymakers, including Chancellor Rachel Reeves, the inflation decline is a welcome development. It may also bring relief to homeowners seeking to remortgage, as falling inflation raises the likelihood of reduced borrowing costs.

The Bank of England’s Monetary Policy Committee is expected to weigh these considerations when it next meets to review interest rates.
Source: Sky news