MNI BRIEF: BOE's Taylor Says Downside Risks Still Rising

UK inflation is increasingly likely to undershoot its target next year, as risks rise of a hard landing and recession, Bank of England Monetary Policy Committee member Alan Taylor said in a speech on Tuesday.

Potential knock-on effects from trade diversion, stemming from U.S. tariffs and retaliatory measures, mean a downside 'bumpy landing" scenario with prolonged economic weakness and below-target inflation is "increasingly likely” by late 2026, and the risk of a recessive hard landing is also rising, Taylor said.

"My current view is one of a preponderance of downside risks, which I see as having increased steadily over the last 12 months," Taylor said at King's College, Cambridge.

Taylor has voted in favour of more rapid easing than the majority on the MPC in recent meetings. (See MNI BOE WATCH: Bank Holds Rates But Pares Scale Of Annual QT)