A senior Bank of England rate-setter, Alan Taylor, has downplayed the recent surge in inflation and reiterated calls for further interest rate cuts.
A member of the Monetary Policy Committee (MPC), Taylor attributed the fresh inflation spike to “one-off factors” linked to President Donald Trump’s trade war, as reported by City AM.
While he welcomed recent trade progress, including the UK’s deals with the US and EU, he cautioned that these only covered small portions of the UK’s trade operations.
Speaking to the Financial Times, Taylor stated: “I’m not going to pre-emptively announce my vote,” but indicated his belief that a lower monetary policy path was necessary.
He warned of increasing risks due to global developments, suggesting that Trump’s trade offensive could hinder growth. Despite UK growth exceeding expectations in the first quarter of the year, with GDP expanding by 0.7 per cent, Taylor expressed significant concern about the economy’s trajectory.
Inflation spike to go away
The Bank of England cut interest rates to their lowest level since 2023 at 4.25 per cent in its last meeting this month. However, the decision revealed major divisions within the nine-member panel.
Taylor and Swati Dhingra advocated for a half point cut, while Huw Pill and Catherine Mann voiced concerns about persistent inflation.
Last week’s figures revealed a leap in inflation to 3.5 per cent in April, largely due to the financial strain of Chancellor Rachel Reeves’ tax increases on businesses.
Taylor stated: “[Higher inflation] is not coming from demand and supply pressures; for the most part, it’s coming out of one-time tax and administered price changes.”
The MPC member pointed to regulated price increases such as water bills and energy caps as key contributors to this surge.
“[The Bank of England] forecast path is saying there is going to be an inflation hump and then it’s going to go away,” he said.
