Published by Global Banking & Finance Review®
Posted on January 14, 2026
2 min readLast updated: January 19, 2026
Add as preferred source on GoogleAlan Taylor of the Bank of England predicts further interest rate cuts as inflation nears the 2% target, with policy normalization expected sooner.
LONDON, Jan 14 (Reuters) - Interest rates set by the Bank of England should continue to fall as inflation is likely to settle around the central bank's 2% target soon, BoE policymaker Alan Taylor said on Wednesday.
"We can now see inflation at target in mid-2026, rather than having to wait until 2027 as in our previous projection," Taylor said in the text of a speech he was due to give at the National University of Singapore.
"I see this as sustainable, given cooling wage growth, and I now therefore expect monetary policy to normalise at neutral sooner rather than later.... Interest rates should continue on a downward path, that is if my outlook continues to match up with the data, as it has done over the past year."
Taylor was part of a five-strong majority on the central bank's Monetary Policy Committee that approved a cut in the BoE's benchmark interest rate to 3.75% from 4% in December. The other four MPC members favoured no change to borrowing costs.
(Writing by William Schomberg; Editing by Sarah Young)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to keep the economy running smoothly.
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic goals such as controlling inflation, consumption, growth, and liquidity.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount. They are influenced by central bank policies and economic conditions.
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, maintaining monetary stability, and overseeing the financial system.
The Monetary Policy Committee (MPC) is a group within the Bank of England that meets regularly to set the official bank rate and make decisions regarding monetary policy.
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