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MNI BRIEF: BOE MPC's Taylor Backs Pre-emptive Rate Cuts

BOE MPC newcomer Alan Taylor on a gloomy economic outlook and his favoured policy response
Bank of EnglandCentral Bank NewsPolicy NewsHomepageCEEMEABriefUKStory

MNI (LONDON) - The UK economic outlook is increasingly gloomy and there is growing evidence that demand was weakening, Bank of England Monetary Policy Committee member Alan Taylor said Wednesday as he made the case for pre-emptive rate cuts.

Speaking for the first time publically as an MPC member, at Leeds University Taylor said he increasingly saw the most likely scenario as one where the economy had suffered a large external inflation shock that would wear off as normal and that demand was worsening and households were suffering from "cashlow squeeze" as a consequence of restrictive monetary policy and recent Budget measures. "Right now, I think it makes sense to cut rates pre-emptively to take out a little insurance against this change in the balance of risks, given that our policy rate is still far above neutral and would still remain very restrictive," Taylor said. (see MNI INTERVIEW: Gilt Hit Weighs On Inflation - Ex-BOE Saunders )

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MNI (LONDON) - The UK economic outlook is increasingly gloomy and there is growing evidence that demand was weakening, Bank of England Monetary Policy Committee member Alan Taylor said Wednesday as he made the case for pre-emptive rate cuts.

Speaking for the first time publically as an MPC member, at Leeds University Taylor said he increasingly saw the most likely scenario as one where the economy had suffered a large external inflation shock that would wear off as normal and that demand was worsening and households were suffering from "cashlow squeeze" as a consequence of restrictive monetary policy and recent Budget measures. "Right now, I think it makes sense to cut rates pre-emptively to take out a little insurance against this change in the balance of risks, given that our policy rate is still far above neutral and would still remain very restrictive," Taylor said. (see MNI INTERVIEW: Gilt Hit Weighs On Inflation - Ex-BOE Saunders )

Keep reading...Show less