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Home > Finance > Bank of England's Taylor says rates set to fall further as inflation drops

Bank of England's Taylor says rates set to fall further as inflation drops

Published by Global Banking and Finance Review

Posted on January 14, 2026

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Tags:interest rates UK economy monetary policy financial markets

Bank of England's Alan Taylor Predicts Further Interest Rate Cuts

Interest Rate Projections and Economic Factors

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.

Inflation Trends

"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.

Monetary Policy Changes

"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."

Committee Decisions

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)

Frequently Asked Questions about Bank of England's Taylor says rates set to fall further as inflation drops

1What is inflation?

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.

2What is monetary policy?

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.

3What are interest rates?

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.

4What is the Bank of England?

The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, maintaining monetary stability, and overseeing the financial system.

5What is the Monetary Policy Committee?

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.