By Andy Bruce

LEEDS, England (Reuters) – The Bank of England should move quickly to bring down interest rates given signs of a slowdown in Britain’s economy, Alan Taylor, the BoE’s most recently appointed interest rate setter, said on Wednesday.

Taylor, an economics professor, voted to cut rates in November—when the Bank Rate was reduced to its current level of 4.75%—and again in December when the Monetary Policy Committee majority left it unchanged.

“We are in the last half mile on inflation, but with the economy weakening, it’s time to get interest rates back toward normal to sustain a soft landing,” Taylor stated in the text of a speech he was due to deliver at Leeds University.

“It is this logic that convinced me to vote for an interest rate cut in December.”

The BoE has reduced its benchmark Bank Rate twice since August—less than other central banks—and stressed it is likely to advance gradually with further cuts, due to persistent inflation pressures in Britain’s economy.

Taylor noted that he believed the risks surrounding inflation have shifted in the past year, diminishing more rapidly than anticipated over 2024.

Sterling fell against the dollar around the time Taylor’s speech text was released, losing about a third of a cent.

Data released earlier on Wednesday indicated that Britain’s headline rate of inflation slowed to 2.5% in December, down from 2.6% in November. Underlying measures of price growth monitored closely by the BoE also cooled more swiftly.

Taylor remarked that while inflation risks appeared to be diminishing, the potential for a downside scenario in Britain’s economy had increased. Although he did not consider it his base case, he deemed it appropriate to cut rates in response.

“Right now, I think it makes sense to cut rates pre-emptively to take out a little insurance against this change in the balance of risks, given that our policy rate is still far above neutral and would remain very restrictive,” he concluded.