The new interest rate setter of the Bank of England has shown a dovish tendency, stating that a weakening economy will accelerate the pace of interest rate cuts.

Noting that, Alan Taylor, the most recent interest rate setter at the Bank of England, said that if the economy weakens, the Bank of England may cut interest rates faster than market expectations. Taylor made his first public appearance after joining the Monetary Policy Committee (MPC) on Tuesday, telling British lawmakers that rising mortgage costs and a "wait-and-see" attitude among consumers and businesses are "putting pressure on the economy." Speaking at a hearing before the House of Commons Treasury Committee, composed of ordinary members of parliament, he said: "If the situation worsens, and my personal bias is towards current downside risks rather than the upside risks of about a year ago, then we may pick up the pace." Taylor's remarks were more dovish, indicating a change in the balance of the Monetary Policy Committee since replacing hawk Jonathan Haskell. Since joining, Taylor has consistently voted in line with the consensus, first keeping rates unchanged in September, and then cutting rates by a quarter point in November. He noted that as more mortgages are refinanced at higher rates, debt servicing costs will put pressure on consumers. Meanwhile, job vacancies are decreasing, businesses seem reluctant to invest further, and households are choosing to save rather than spend after the recent economic crisis. He emphasized the importance of developments in the labor market, as businesses need to decide how to cope with significant increases in wage taxes announced in the budget and further increases in minimum wage, presenting risks of confusion in the labor market. "There are a lot of factors now that scare me a lot." Taylor, along with Bank of England Governor Bailey, Deputy Governor Clare Lombardelli, and external rate setter Catherine Mann, faced questioning. Bailey reiterated that the Bank will adopt a "gradual" approach to rate cuts after only cutting rates twice this year. When asked about the inflation outlook, Bailey seemed to hint at Taylor's dovish stance. "I face risks on both sides. Honestly, if you asked me this question a month ago, I might have been closer to Alan's position," he told lawmakers. Although Bailey refused to define the speed of "gradual" rate cuts, Taylor indicated that this would entail a rate cut every quarter, rather than a more aggressive approach like the US and Eurozone. Traders currently expect the pace of rate cuts in the UK to be slower, anticipating a slight increase of over half a percentage point by the end of 2025. Economist Niraj Shah stated, "The Bank of England is expected to keep rates unchanged in December, but policymakers will be divided. The most hawkish rate-setter, Dhingra, may support further easing policies, as most members are likely to keep rates unchanged. While CKH HOLDINGS Deputy Director strengthened the case for gradualism, external member Taylor has opened the door for accommodative policies in consecutive meetings. On the other hand is Catherine Mann, who has pledged to keep policy unchanged until there is clear evidence that price pressures are easing. Bloomberg Economics expects the Bank of England to maintain a quarterly easing pace in 2025, with rates remaining at 3.75% by the end of next year." Taylor stated that inflation below expectations in recent months indicates that the situation is transitioning to a more normal state, allowing him to be "confident that continuing to gradually reduce interest rates is okay." He noted that the risks of the most pessimistic forecasts at the Bank of England have decreased. "I think progress has been made," he said. "I think there was reason to be cautious six months or a year ago, but I think the data unfolding now fits historical patterns."