Bank of England’s Newest Rate-Setter Shows Dovish Leaning
-- The Bank of England may cut interest rates faster than markets are betting if the economy weakens, according to its newest rate-setter Alan Taylor. In his first public appearance since joining the Monetary Policy Committee, Taylor told UK lawmakers on Tuesday that higher mortgage costs and a “wait-and-see” approach by consumers and businesses are “weighing on the economy.” “If conditions are weaker, and my own views skew to the downside risk now versus the upside risk of about a year ago, then we could go faster,” he said in testimony to the House of Commons Treasury Committee of rank-and-file MPs. “There’s a lot of factors just making me very, very worried now.” Taylor was facing questions alongside BOE Governor Andrew Bailey, Deputy Governor Clare Lombardelli and external rate-setter Catherine Mann. Bailey reiterated the central bank’s “gradual” approach to lowering interest rates after cutting only twice this year. Bloomberg Economics expect the BOE to stick to a quarterly pace of easing in 2025, with rates ending next year at 3.75%.” —Niraj Shah, economist Taylor said that lower-than-expected inflation in recent months suggests a shift “toward a more normal scenario,” giving him “reassurance to think it’s OK to continue with the gradual pace of cuts.” He said the risk of the BOE’s most pessimistic case had declined.
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