Published by Global Banking & Finance Review®
Posted on October 14, 2025
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleBoE's Alan Taylor warns of UK economic turbulence, citing risks of inflation falling below target due to US trade tariffs and potential trade diversion impacts.
LONDON (Reuters) -Bank of England policymaker Alan Taylor said on Tuesday that he saw an increasingly likely risk of a "bumpy landing" for Britain's economy with inflation falling too low, in part due to the impact of U.S. President Donald Trump's trade tariffs.
Taylor said in a speech at the King's College University that the rise in British inflation should fade in 2026 and Trump's tariffs were more likely to hurt growth than push up prices as exports unable to enter the United States sought other markets.
In his speech about trade tariffs, Taylor said his "bumpy landing" scenario for the British economy featured inflation falling below the BoE's 2% target in late 2026 and the economy slipping into a weakened state for a sustained period.
"Part of this scenario, in my mind, could end up resulting from some of the trade diversion pressures that I have described today: if we underestimate the forces of trade diversion washing up on our shores in the next year or two, our inflation forecast will miss the mark," he said.
Taylor and one other member of the nine-strong Monetary Policy Committee voted unsuccessfully to cut interest rates by 25 basis points at last month's meeting. In August, Taylor initially called for a big reduction in Bank Rate to 3.75% before changing his vote to ensure a majority for a cut to 4%.
(Reporting by Suban Abdulla; writing by William Schomberg)
Inflation is the rate at which the general level of prices for goods and services rises, leading to a decrease in purchasing power. Central banks attempt to limit inflation to keep the economy stable.
Monetary policy refers to the actions taken by a country's 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. They are influenced by central bank policies and affect economic activity.
A central bank is a national institution that manages a state's currency, money supply, and interest rates. It oversees the banking system and implements monetary policy.
A financial crisis is a situation in which the value of financial institutions or assets drops rapidly. It can lead to a loss of confidence in the financial system and can trigger economic downturns.
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