Policymaker flags room to ease policy as inflation drifts towards 2% target
The Bank of England may need up to three further interest rate cuts to reach a neutral level as inflation returns towards 2% over the next year, according to Monetary Policy Committee (MPC) member Alan Taylor.
Taylor, an external member who has repeatedly backed larger reductions over the past 18 months, said rising unemployment and weaker wage growth could justify additional easing.
He said the labour market was “converging on a pessimistic outlook” and warned that poor productivity could leave the UK economy flat, with lower rates providing some support.
“I have become more reassured that we are proceeding towards inflation normalisation at a reasonable pace,” Taylor said in a City AM report. “We might have two or three rate cuts to go before the theoretical neutral level.”
Three more interest rate cuts could come, Bank of England official says https://t.co/5h5Bg2gYNx
— City A.M. (@CityAM) February 23, 2026
Taylor’s comments come after the Bank of England left its base rate on hold at 3.75% earlier this month, following a quarter‑point cut in December, as policymakers judge whether slowing wage growth and a softer labour market will be enough to return inflation to target.
The Office for National Statistics has reported that annual inflation eased to 3% in January, down from 3.4% in December, helped by lower prices for petrol, bread and airfares. Taylor noted that services inflation remains a concern, given its importance as a measure of domestic price pressure.
He played down suggestions that unemployment would remain structurally high or that the MPC must quickly adopt a much more accommodative stance to avert recession, although he has previously cited recession risk as a reason for favouring faster cuts than most colleagues.
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