The news that inflation is still 3.8% has not changed the broad belief that interest rates will not be cut next month when the Bank of England meets.

While 3.8% is almost twice the target level of 2%, the figure released by government was actually lower than expected. Economists had widely predicted that it would reach a peak of 4% in September before starting to fall. 

But what about interest rates?

Peter Stimson of the MPowered mortgage lender comments: “The possibility of a November base rate cut has inched from outlandish to outside. Last month the Bank of England predicted that CPI inflation would peak in September, warning that it could breach 4%.

“In that context September’s status quo figure – even if 3.8% is nearly double the Bank’s target – should be seen as a win. The Bank insists the inflationary pain will be temporary, and while headline CPI stubbornly refuses to fall, we are seeing some progress as core inflation continues to tick down.

“Wage inflation is cooling too, and the pace of food price rises is finally slowing – all of which could relieve the inflationary pressure in coming months.But the economy is far from out of the inflationary woods, and no-one should expect interest rates to fall any time soon.”

Rachel Geddes of the Mortgage Advice Bureau says: “While inflation holding steady at 3.8% reflects the persistent pressures from political uncertainty and elevated costs, the mortgage market continues to remain resilient. In fact, many don’t realise they’re now in a prime position to get onto the property ladder – especially compared to this time last year, or even six months ago.

“A ‘keep calm and carry on’ approach is needed here. While inflation remains well above the 2% target, the housing market remains in a strong place, and more aspiring buyers than ever are realising that they can get on the ladder sooner.”

Nathan Emerson, chief executive of Propertymark, comments: “We still sit within a phase where the economy remains sensitive, both domestically and globally. We have seen inflation trend back upwards over the last twelve months; however, we are thankfully in a much better position than we were only three years ago, when the rate of inflation sat at 11.1%.

“The Bank of England is still in a challenging position when it comes to making any calls to further reduce the base rate currently. However, there is widespread optimism into the new year that we could see the Monetary Policy Committee consider new dips in the base rate, all of which should help provide additional affordability for many consumers regarding housing.”