Hopes of a rate cut today were dashed by news that headline inflation remained at 2.2%.
That was the message from a range of mortgage experts who spoke to the Newspage news agency ahead of the Bank of England's monetary policy meeting.
To make matters worse, the Consumer Price Index rose 2.2% in the 12 months to August 2024, unchanged from July, although core inflation and services inflation rose slightly. 
Gabriel McKeown, head of macroeconomics at Sad Rabbit Investments, said: “The persistence of inflation in the services sector is particularly noteworthy as this often reflects wage pressures, which may be harder to contain.”
“However, the Bank of England should take note of recent economic data which shows signs of weakness in the UK economy, with GDP growth slowing and signs that the labour market is starting to cool.”
Riz Malik, independent financial adviser at R3 Wealth, comments: “Given the Bank of England's track record, the figures are not a strong enough justification for a rate cut. This is not to say there won't be further rate cuts later this year and into next, but the figures strongly suggest a hold.”
John Chong, head of equities and markets at Investors Edge, added: “A September rate cut was not initially expected, but this has now become more likely following the inflation data, particularly with core inflation rising to the first time in 15 months.”
“This is mainly due to higher airfares, but it is notable that core inflation has been on an anemic footing for a fourth consecutive month. On a three-, six- and nine-month annualized basis, core CPI is well above the bank's 2% target. Meanwhile, services inflation has followed an uncertain and volatile trajectory and remains far from a consistent 2% headline CPI level.”
Andrew Montlake, managing director at Coreco, added: “The latest figures should temper expectations for those who were overly hopeful of a flurry of cuts in the Bank of England's base rate. With core and services inflation remaining stubbornly elevated, nothing further looks likely to come until at least November.”
“However, swap rates have fallen on market expectations of a slow and steady decline over the next 12 months, and mortgage lenders are fully in the rate war so may choose to hold their ground for now rather than go any further.”
Meanwhile, Propertymark CEO Nathan Emerson holds out a faint hope that the Bank of England may continue to cut rates. “While it would of course be good to see inflation fall further, Propertymark is hopeful that the Bank of England feels in a strong enough position to consider further rate cuts when it meets,” he says.
“Inflation remaining within bounds, combined with further cuts in base rates over the coming months, is likely to bring a wave of renewed confidence and affordability to the housing market. But most importantly, it will provide much-welcome relief and financial flexibility for many households compared to just six months ago.”
