By Suban Abdulla and Andy Bruce

LONDON (Reuters) – Bank of England policymaker Alan Taylor indicated that the prospect of a soft landing for the UK economy is now at risk. Recent economic data suggests the need for five interest rate cuts in 2025 instead of four.

> “Previously, I had seen a UK soft landing in the cards, with some remaining upside risks to inflation from the bump in 2025,” Taylor stated during a speech at a European Central Bank summit in Sintra, Portugal.

He emphasized the growing likelihood of a downside scenario in 2026 fueled by demand weakness and trade disruptions.

The term “soft landing” is used to describe a situation where employment rises and economic growth continues after a period of increasing interest rates.

Taylor has supported interest rate cuts in five out of seven Monetary Policy Committee (MPC) meetings since his appointment in September. In May, he favored a substantial 0.5 percentage-point cut, followed by a 0.25 percentage-point cut in June.

In an interview with Bloomberg TV on Wednesday, he clarified that he did not believe larger rate cuts were necessary. Nonetheless, the limited number of eight MPC meetings per year creates an “integer problem” for faster easing.

Taylor, known for his clear expectations regarding interest rates, stated the MPC would benefit from better communication about their future rate path.

> “After some shocks and noise clouded my view of the economy and global developments in the first quarter, my reading of the deteriorating outlook suggested to me that we needed to be on a lower rate path, needing five cuts in 2025 rather than the market-implied quarterly pace of four,” he explained.

Charts shared in his speech indicated that interest rates could drop to approximately 2.25% in the latter half of next year if his negative scenario unfolds.

The Bank of England held rates at 4.25% last month, and investors anticipate two additional quarter-point cuts to reduce borrowing costs to 3.75% by year-end.