January 17, 2025 12:05 GMT
BOE: Taylor Echoes Earlier Comments In Yorkshire Post Interview
BOE
An The Yorkshire Post has released an interview with BOE External member Taylor (link). Initial headlines from BBG lean dovish, but are largely in line with comments from his inaugural speech on Wednesday. There has been a only limited dovish reaction in GBP FX and Gilt futures as a result.
- "*BOE'S TAYLOR SAYS PREEMPTIVE CUTS MAKE SENSE: YORKSHIRE POST"
- "*BOE'S TAYLOR: RECENT DATA DRIFT BEEN MORE TO PESSIMISTIC SIDE"
- "*BOE'S TAYLOR CITES NEED TO BE VERY ALERT TO DIRECTIONAL RISKS"
A reminder of the key highlights from Wednesday's speech:
- Under case 1 he sees 125-150bp of cuts needed in 2025 and under case 2 100bp.
- He also describes the probability of case 1 rising in multiple parts of the speech.
- In terms of neutral rates under case 1/2 he expects that this is somewhere in the 2-3% range. We are still at 4.75% after 2x25bp cuts - so even 150bp of cuts in 2025 would still see Bank Rate a bit above Taylor's estimate of where neutral would be.
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