Bank of England (BoE) policymaker Alan Taylor said on Tuesday that keeping interest rates on hold for an extended period remains the most appropriate policy response, according to the text of a speech due to be delivered at an event hosted by Barclays and the Center for Economic Policy Research.

Key takeaways:

An extended hold at this level is, to me, very much the correct and appropriately measured policy response we need.

Bank Rate is 75 bps above my estimate of neutral.

If more slack opens up like in BoE’s scenario ‘A’, we may end up having to cut quickly and could even see Bank Rate below neutral for a while.

In worst-case inflationary scenario, nothing is off table, BoE would have to do what it must to defend nominal anchor.

We enter this shock with a very weak economy.”