Overview

• In an Oct. 14 speech at King’s College Cambridge, Alan Taylor said a bumpy landing is increasingly likely, with inflation falling below the 2% target in late 2026 and output staying weak for a sustained period.
• Taylor argued that tariffs enacted by U.S. President Donald Trump are more likely to depress UK growth than raise prices as exports are redirected away from the U.S. market.
• He warned of a small but rising chance that negative growth could take hold, with recession dynamics becoming difficult to contain, and he said the risk of a harder downturn is increasing if fiscal strains intensify.
• The policymaker cautioned that interest rates may still be too high, saying the UK may have braked too hard for inflation to return smoothly to target with the economy near potential.
• Headline inflation stands around 3.8% with Bank Rate at 4%, and Taylor noted he and another MPC member recently voted for a 25bp cut after he previously shifted in August to secure a cut to 4%.