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The Bank of England may need to cut rates as many as five or six times in the coming year because of the stalling economy, according to a member of its rate-setting committee, as he urged the central bank to take action to secure a “soft landing”.
Alan Taylor said the BoE’s “gradual” approach to rate reductions implied four quarter-point cuts by the end of 2025. But he warned that the weakening economy could mean the BoE needs a “more accelerated pace of rate cuts”, with its key rate being reduced by 1.25 or 1.5 percentage points in the coming year.
This “pessimistic scenario” is becoming more likely given recent data, said Taylor, an external member of the Monetary Policy Committee. “The most recent data and forward-looking activity indicators present an increasingly gloomy outlook for 2025.”
This is a developing story.