Inflation Surge: BoE Policymaker Calls for Lower Interest Rates

In light of recent economic developments, Bank of England policymaker Alan Taylor has downplayed fears surrounding the UK's inflation spike, which reached an annual rate of 3.5% in April. In an interview with the Financial Times, Taylor attributed this surge to 'one-time tax and administered price changes,' rather than shifts in demand and supply.

The BoE recently adjusted its inflation forecast, with expectations of a peak at 3.5% by the third quarter of 2025. The central bank also anticipates a modest economic contraction due to the impact of U.S. tariffs. Taylor, alongside another Monetary Policy Committee member, advocated for a half-point cut in interest rates during May's policy meeting, further signaling concerns about economic growth under current global trade conditions.

Taylor's remarks, made prior to a U.S. court's temporary reinstatement of Trump's tariffs, highlighted increasing risks due to global economic developments. Meanwhile, BoE Governor Andrew Bailey defended a 'gradual and careful' approach to rate cuts. With a spending review imminent, UK finance minister Rachel Reeves is set to address fiscal pressures in an important upcoming policy discussion.

(With inputs from agencies.)