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BOE: Taylor explicitly sets out his views on rates and where he stands on cases

BOE
Bank of EnglandCentral Bank NewsCEEMEABulletUKMarketsFixed Income BulletsForeign Exchange Bullets

Lots to digest in Taylor's inaugural speech (the market reaction is likely subdued somewhat in rates markets given that he already dovishly dissented in December).

  • He sees the risks of case 1/2/3 as 40/40/20.
  • 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.
  • Very detailed speech, very explicit in his views. Q&A coming up later could be equally interesting.
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Lots to digest in Taylor's inaugural speech (the market reaction is likely subdued somewhat in rates markets given that he already dovishly dissented in December).

  • He sees the risks of case 1/2/3 as 40/40/20.
  • 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.
  • Very detailed speech, very explicit in his views. Q&A coming up later could be equally interesting.