Finance
BoE's Taylor warns soft landing for UK economy at risk, sees more rate cuts
Published by Global Banking & Finance Review®
Posted on July 2, 2025
3 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on July 2, 2025
3 min readLast updated: January 23, 2026
BoE's Alan Taylor warns that the UK's economic soft landing is at risk, advocating for five rate cuts in 2025 due to demand weakness and trade disruptions.
By Suban Abdulla and Andy Bruce
LONDON (Reuters) -Bank of England policymaker Alan Taylor said on Wednesday that a soft landing for Britain's economy is now at risk and that economic data had recently argued for five interest rate cuts in 2025 rather than four.
"Previously, I had seen a UK soft landing in the cards, with some remaining upside risks to inflation from the bump in 2025," Taylor said in a speech at a European Central Bank summit in Sintra, Portugal.
"Now I see that soft landing as being at risk, and greater probability of a downside scenario in 2026 pushing us off track, as demand weakness and trade disruptions build."
Economists use the term "soft landing" for a situation where employment rises and economic growth continues after a cycle of rising interest rates.
Taylor has voted to cut interest rates in five out of seven Monetary Policy Committee meetings since he joined in September. In May, he backed an outsized 0.5 percentage-point cut, followed by a 0.25 percentage-point cut in June.
He told Bloomberg TV on Wednesday that he did not believe bigger interest rate cuts were necessarily needed.
However, having only eight Monetary Policy Committee meetings per year posed an "integer problem" for policymakers seeking a faster pace of easing, he told Bloomberg TV.
Taylor, who has caught the eye of economists since joining the MPC because of his clarity about his own expectations for the path of interest rates, said in his speech the MPC would be "well-served" by finding a vehicle for communicating its beliefs on future rates.
"After some shocks and noise clouded my view of the economy and global developments in the first quarter, my reading of the deteriorating outlook suggested to me that we needed to be on a lower rate path, needing five cuts in 2025 rather than the market-implied quarterly pace of four," Taylor said.
Charts published in Taylor's speech showed interest rates could fall to around 2.25% in the second half of next year if his downside scenario for the economy comes to fruition.
The BoE held interest rates at 4.25% last month, and investors are betting on the central bank to reduce borrowing costs in two further quarter-point moves to 3.75% by the end of the year.
(Reporting by Suban Abdulla and Muvija M; Writing by Andy Bruce; Editing by William James and Alison Williams)
Alan Taylor warned that a soft landing for the UK economy is at risk due to demand weakness and trade disruptions, suggesting a greater probability of a downside scenario in 2026.
Taylor has voted to cut interest rates in five out of seven Monetary Policy Committee meetings since he joined in September.
The Bank of England held interest rates at 4.25% last month, with expectations for further reductions to 3.75% by the end of the year.
A 'soft landing' refers to a situation where employment rises and economic growth continues after a cycle of rising interest rates.
Taylor mentioned that having only eight Monetary Policy Committee meetings per year creates an 'integer problem' for policymakers looking to ease rates more quickly.
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