Thank you for visiting, don't forget to subscribe by following here if you enjoy our content. We use follow.it to give you maximum control over your news.
The Bank of England might need to implement between five to six interest rate cuts over the coming year, according to a key policymaker who has voiced concerns about the UK’s stalling economy. Alan Taylor, an external member of the Monetary Policy Committee, suggests a more aggressive approach may be necessary to secure a ‘soft landing’.
Speaking at Leeds University Business School, Taylor outlined that the BoE’s current ‘gradual’ strategy implies four quarter-point cuts by the end of 2025, which would reduce borrowing costs to 3.75 per cent. The policymaker warned that mounting evidence of economic weakness could necessitate a ‘more accelerated pace of rate cuts’, potentially leading to a reduction of 1.25 or 1.5 percentage points within the next 12 months.
Recent economic indicators paint a concerning picture for 2025, with GDP stagnation and declining business sentiment at the forefront of Taylor’s concerns. His stance reflects a growing acknowledgement within the BoE that the battle against inflation may be entering its final stages, whilst the risk of economic downturn increases.
Taylor’s perspective gains additional weight following his participation in a minority vote favouring further rate cuts during last month’s committee meeting. The BoE, which projects zero growth for the last quarter of 2023, is widely anticipated to implement another quarter-point reduction at its February meeting.
The markets are currently pricing in a reduction to 4.5 per cent, with expectations of an additional quarter-point cut later in 2025. However, the longer-term outlook remains uncertain, complicated by mixed inflation signals and the unknown impact of Chancellor Rachel Reeves’ October budget on labour costs and prices.
Taylor emphasised that while previous concerns about entrenched inflation warranted caution, the current economic landscape presents different challenges. The risk of a sudden economic downturn, particularly due to emerging cash flow pressures on businesses and households, could warrant a more decisive response from the central bank.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.